THE BASIS POINT

Banks On Hook For Rundown Foreclosures

 

On a 28-10 vote Monday, the California State Senate passed a bill imposing fines on lenders neglecting foreclosed properties. Lenders would face fines of $1000 per day for letting properties languish. Rundown properties, lawmakers argue, lead to crime, attract squatters, and make communities less safe.

Under the passed Senate bill, lenders would have 14 days from receipt of a notice from local governments to cure problem properties, then be subject to the $1000 per day fine. The bill, supported by consumer groups and local governments, was sent to the Assembly and would take effect immediately after being signed into law.

A similar measure didn’t pass in January because of lender pressure. Under the revised bill, lenders must try to reach borrowers in person or by telephone 30 days before starting foreclosure proceedings. It also requires owners of foreclosed properties to give renters 60 days’ notice before they can be evicted.

The financial sector has been battered all year in the stock market on housing and credit related threats to profits. This additional expense certainly won’t help matters.

 

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