Banks, lenders face stiff fines for blighted, foreclosed homes under proposed LA law

Banks and other lenders would be hit with stiff fines if they fail to keep foreclosed homes from becoming a blight, under an ordinance to be considered by the Los Angeles City Council today. Under the proposed ordinance, the city would create a registry of foreclosed properties, whose owners would be told about requirements for keeping the property "clean and free from accumulation of debris, rubbish, garbage, trash, overgrown vegetation and other similar material." City Attorney Carmen Trutanich stated in a letter that the "Foreclosure Registry Program" would serve as "a mechanism to protect residential neighborhoods from becoming blighted through the lack of adequate maintenance and security of abandoned properties as a result of the foreclosure crisis." Banks would be charged an annual registration fee of $155 per property. Failure to sign up will result in a fine of $250 a day. Banks that fail to maintain foreclosed homes would be charged "$1,000 per calendar day for each structure in violation of the city's regulations, not to exceed $100,000 per calendar year." According to Trutanich, that is the maximum civil penalty authorized by the Civil Code for such cases. Banks would be given 30 days to correct the problem before being penalized. Based on the budget approved by the council last week, the city is depending on the fees and fines to generate about $5 million in the coming fiscal year. The city's unions have been clamoring for the ordinance for months, in the hopes that it would help raise revenues and reduce layoffs. A leader with the Coalition of Los Angeles Unions said that "banks helped create the budget crisis with toxic lending practices," and they now "need to help solve it." News article by: Daily News Wire Services Posted: 05/21/2010 11:07:11 AM PDT