Wednesday, August 29, 2007

L.A. Times: Blight moves in after foreclosure

Ironic, isn't it. We've spent years gentrifying blighted neighborhoods to get rid of blight, to the point where bloataminiums and bloated SFRs get so expensive that their owners cannot keep up payments, they get foreclosed on and blight comes back in full circle fashion. That's not what this August 28 article by David Streitfeld says exactly, but that's just my observation.

Even if you think you are sitting pretty in your home, because you have it paid off or almost paid off, the financial condition of your neighbors is going to effect your lifestyle, and that could be good or bad. When the gun goes off during a boom, even the turkeys fly. But when there are lots of foreclosures in your neighborhood they can drag down the rest of the neighborhood.

The article talks about Northridge neighbors who are stepping in and voluntarily maintaining an empty foreclosed property in order to prevent problems. Efforts to contact realtors, bank owners, and lenders go nowhere - these neighbors with justification complain about nobody taking responsibility for the property. Tina Hess, the assistant Los Angeles city attorney handling housing enforcement and problem properties says the blight "is coming" and wants to double the number of property inspectors, who have the power to have pools fenced and empty houses secured against trespassers.

In the meantime, squatters are living in Beverly Hills. There is a case of a foreclosed property that should be empty but isn't. Since it was let go too long, the eviction that HSBC, the owning bank, is pursuing, may take many months. At least the squatters are taking the trash out! Darn good of them!

According to a west Los Angeles police officer, if a squatter knows what he is doing, he "can get six months in a place with a kick-ass view."

Rental fraud is thriving. Fraud perpetrators posing as owners are appearing at empty rental properties and offering rental or lease contracts to unsuspecting renters. So some of these purported squatters are otherwise renters with good intentions. They are producing signed leases showing that they've been paying somebody rent. And in some cases it's much easier (and cheaper) to pay them to leave than to take them to court.

And yet another problem is developing - a public health problem. Think about pools of water at foreclosed homes and we've got quite a breeding ground. Algae, bacteria, and West Nile. Right now a health inspection call that's supposed to be responded to within 3 days is running closer to 3 weeks.

Oh we've got quite a spectacle developing. I'm getting a chill down my spine just thinking about how this tragi-comedy will go down over the next few years.

By the way, 100 homes are being foreclosed on a day in Southern California, up from 13 a year ago.


Blogger Edwardo said...

And one thing I would like to know is where are all those people going who are being foreclosed on?

8:54 AM, August 29, 2007  
Blogger bearmaster said...

I've been wondering that myself.

9:00 AM, August 29, 2007  
Blogger Rob Dawg said...

They Heloc'd a 60% downpayment into Longmont, CO or Charlotte, NC and took out a 5.25% prime fixed 30 and pocketed $150k and walked from the SFV POS encumbered with $850k in debt.

10:19 AM, August 29, 2007  

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