As the foreclosure crisis in Los Angeles continues, a group of residents and members of Service Employees International Union (SEIU Local 721), the Alliance of Californians for Community Empowerment (ACCE) and Good Jobs L.A. led a tour of blighted bank-owned foreclosed properties and asked the city to begin assessing the banks with fines under the Foreclosure Registry Ordinance.

“These banks are devastating our communities, and the city and the taxpayers are covering the cost,” said ACCE member and South L.A. neighborhood activist Angelina Jimenez. “They caused the problem–it’s time to make them pay for it.”

Tour participants saw homes in severe post-foreclosure neglect and heard of the compounded negative impact the properties have had on surrounding neighborhoods–break-ins, trash and health hazards, lost property values, and an increase in area crime.

Leaders of the tour read off the names of the banks that own each property and asked that the city fine the maximum authorized amount for each bank’s failure to maintain the properties from the date they became blighted. Major offenders were Bank of New York Mellon Corp., Deutsche Bank, U.S. Bank, and Fannie Mae, which is a government entity.

Participants were provided data on the success of similar ordinances in the cities of Oakland, Richmond, Riverside and San Jose, where millions of dollars in fines have been collected, paying for other city services as well as additional inspectors to enforce the policies.

In May 2010, Los Angeles passed the Foreclosure Registry Ordinance, which was designed to protect neighborhoods from foreclosure blight. The ordinance requires banks to register properties that they have foreclosed on, or once they begin the foreclosure process by issuing a Notice of Default (NOD). The ordinance imposes fines of up to $1,000 per day ($100,000 per year cap) on banks that fail to maintain those properties.

Two years later, however, no banks have been fined for violating the ordinance, even though the city is riddled with blighted homes. Other cities with a stronger enforcement process have seen much better results from the ordinance. Riverside, for example, in its first year enforcing the ordinance, issued $7 million in fines and collected $3 million in fees, amounting to approximately $2,700 in fines for every foreclosed property in the city.

As of May 10, 2012, 18,852 properties in Los Angeles are in some stage of foreclosure. If Riverside, with one-twelfth the population and one-seventh of the foreclosures imposed $7 million in fines, considering all other things equal Los Angeles, if as effective in policing and fining, might be expected to issue $49 million in fines in its first year, according to research from ACCE.

The group has come up with a list of ways to expand enforcement revenues under the existing Los Angeles Foreclosure Registry Ordinance including:

  • Dedicate code inspection staff to do vacant property inspections.
  • Improve communication by creating a direct link between code enforcement officers and senior bank officials who can better resolve violations and fines.
  • Implement a proactive inspection program by focusing on all properties owned by a particular bank trustee at the same time.
  • Focus inspections on properties that do not submit required monthly inspection reports.
  • Work with the L.A. County Assessor’s office to improve the timeliness of reports to the city and other municipalities when banks begin the foreclosure process by issuing a Notice of Default (NOD).

Representatives from the mayor’s office and representatives for council members Jose Huizar (District 14), Paul Krekorian (District 2), Tony Càrdenas (District 6), and Eric Garcetti (District 13) participated in the blight tour to get informed and show their support. Grace Harper, chief of the Code Enforcement Bureau, also participated. “It is important that we bond together to fix this problem and improve communities,” she said. “We all have busy lives and lots of things that come across our desks, but we don’t always see what you all see. We understand that funding is not coming in the way we need it to, but living next to some of these properties must be devastating. There has to be a way for us to do more.”

Councilwoman Jan Perry of the 9th District represented herself. In a press conference in front of the blighted property 824 W. 56th St., Perry said: “It’s utterly disrespectful the way that banks have abandoned these properties. Many of these homes are so rundown and even have black mold, the worst kind a property can have. It’s apparent that this was once a nice home and a family probably had a good life here,” she continued. “We are going to stay on top of this issue and one block at a time we are going to turn these neighborhoods in the opposite direction.”

Following Perry’s remarks members of ACCE led the crowd in a chant, “Hey, big banks, you can’t hide, we can see your greedy side!” which was followed by cheers and applause.

All the properties visited were in completely unlivable condition, but that didn’t stop them from having inhabitants. Squatters had taken over a number of properties, which are now overrun with gang and drug activity. Many nearby residents admit being fearful of the squatters and upset at the eyesores these properties create on otherwise attractive blocks. “It brings down our property value,” one resident said angrily.

“We are hoping that by pushing these banks they are either going to clean up or pay up. Hopefully, this ordinance once strengthened and enforced, will be a disincentive for banks to foreclose on these properties because there are already so many in such bad condition,” said Peter Kuhns, one of the lead organizers of the tour.

Members of the community who come across blighted homes should call 311 to report them, and the Los Angeles Police Department to report illegal activity.

For more information, contact Peter Kuhns at (213) 272-1141.