Wednesday, May 16, 2012

A "blight" ordinance to support?

Default notices would cost banks money and trouble from the start under a proposed Oakland city "blight" ordinance that won unanimous initial approval last night.

Here's how the SF Chron explans this tidy bit of poetic justice, which is sponsored by Council member Jane Brunner:
"Banks would be required to register homes in a city blight database the moment they send homeowners a notice of default, which is typically issued after three months of missed payments.
Banks would have to visit the homes once a month and gauge from the outside whether the house is occupied. If vacant, banks would be forced to pay a $568 annual registration fee, hire a property manager, secure the premises and maintain the home and yard. The city hopes to use some of the fees to help homeowners avoid foreclosure."
Appropriate. It says to the banker that, if you set out to assert ownership over a property -- if you set out to impair the existing homeowner's title -- if you give the borrower less reason to feel like an owner and more reason to walk away -- then it's only fair that you, the banker, start to take on the duties of ownership.

Per the Chron, bank lobbyists see it differently:
" "You're asking us to come in and maintain homes that legally aren't the bank's property yet," said Beth Mills, a spokeswoman for the California Bankers Association, which represents 200 financial institutions in the state."
Oh? So then what are these deed of trust documents you keep waving at your borrower?

The Chron says, "Roughly half of defaulted homes financed by banks are blighted, according to a city analysis."

This morning's news story doesn't say how that "blighted" half breaks down by neighborhood. But as I noted earlier, the National Fair Housing Alliance published a report last month (direct PDF link here) saying that, in nine U.S. cities including the Oakland/Richmond/Concord area, foreclosed properties tend to receive different levels of care depending on the perceived race of the neighbors, "with foreclosed properties in White areas being much better maintained and marketed than those in neighborhoods of color."

In general the idea of "blight" is problematic. It gets used in small-scale ways to bully small businesses or penalize nonconforming households. It gets used in large-scale ways to pretend that neighborhoods are not worth keeping, so they can be torn down and replaced.

But this law? Sounds like a good bit of justice.

So, OK, there's potential for abuse if a property only looks abandoned in the opinion of the bank rep. What if it belongs to a family who are trying to get current on payments and stay? What if the bank that's trying to evict them adds insult to injury by sending someone to mow down their wildflowers?

So, OK, respect for the property rights of borrowers who continue to assert them do need to get worked out. Think I'm still rooting for the law, so far.

The SF Chron didn't explain the measure's legislative status so I phoned Brunner's office. Her chief of staff, Zac Wald, said it still needs to go to a second reading.

San Francisco's Supes are reportedly considering a similar measure but it doesn't sound like it goes as far.

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