The Foreclosure Deterrent Project

A presentation about deterring foreclosures will be made to the Hayward City Council.  Your help is needed.  Hayward residents who have foreclosure troubles are encouraged to come to the meeting and tell the council their stories.  Residents who belong to a Homeowners Association where dues have increased dramatically because a foreclosing bank refused to pay HOA fees, please come to the City Council Meeting, Tuesday, December 20, 2011 7 PM , City Hall, Council Chambers, 777 B Street, Hayward. 

There are 1736 active and inactive Hayward properties listed on www.foreclosure.com/ 238 active foreclosures of which 57 are apartments  or condos with apt or # in the address, 637 pre-foreclosures, 476 bankruptcies, the rest are mostly inactive (not for sale) foreclosures. 

WHY DO BANKS FORECLOSE?

Banks foreclose instead of helping the owners renegotiate the mortgage payments because the federal bailout guaranteed the banks would be made whole on the mortgage if they foreclosed.  If they don’t foreclose the banks risk not being made whole and losing money. 

Our goal is to change that equation so that the banks consider the cost of keeping up property when they foreclose.  That gives the bank a negative cash flow while looking for a customer.  A deal with the borrower will better to the bank.  The California legislature has given local government the tool to compel foreclosing banks to take care of foreclosed property. SB1137 (A California Law passed in 2008) says

A legal owner shall maintain vacant residential property purchased by that owner at a foreclosure sale, or acquired by that owner through foreclosure under a mortgage or deed of trust. A governmental entity may impose a civil fine of up to one thousand dollars ($1,000) per day for a violation. Text of SB 1137 as it pertains to maintaining foreclosed property.

 

Foreclosure Deterrent Project Plan       This plan is a work in progress 
 Contact Ellis Goldberg - ellisg237@aol.com 925 451 4303

  • Goals

    • Decrease the inclination of banks to foreclose

    • Increase local government revenue

    • Protect property values

    • Increase public safety

    • Create jobs

    • Penalize foreclosing banks that neglect foreclosed property

  • Strategy

    • Convince city or governmental entities to impose fines and penalties under SB1137.

  • Look at cities that have already implemented SB 1137 based ordinances to determine how successful they are and what are best practices.

  • Make sure that not paying Home Owners Association dues is included in “failure to maintain property”. That affects condominiums and neighborhood HOAs.

  • Make existing ordinances available to municipalities and other eligible jurisdictions so it is easier for them to formulate suitable regulations.

  • Determine the profile of cities & jurisdictions where these ordinances will deter foreclosures.

  • Determine best practices for enforcing the ordinances.

  • Convince cities to fund enforcement
     

  • Tactics:

    • Propose the plan to city councils in various cities & jurisdictions
       

  • Lobby council members

  • Find concentrations of blighted foreclosed local property

  • Find HOAs hurt by banks not paying dues

  • Find allied groups such as

    • Fire fighters who are interested in improving public safety

    • Realtors who are interesting in keeping up property values

    • HOAs who want dues paid on time & property values maintained

  • Target cities

    • Cities with low priced foreclosed homes

    • Cities with lots of condos

    • List of cities in bay area counties with the number of bank owned single residential homes for sale. 

    Source:http://www.foreclosure.com

    This list includes forclosures both for sale and inactive, bankruptcies and pre-foreclosures.
                             
      Alameda     Contra Costa     Solano     Santa Clara    
      Oakland 3161   Antioch 1762   Vallejo 1894   San Jose 4493  
      Hayward 1742   Concord  1394   Fairfield 1298   Gilroy 392  
      Fremont 1169   Pittsburg 1196   Vacaville 1099   Milpitas 333  
      San Leandro 888   Brentwood 959   Suisun City 481   Santa Clara 277  
      Livermore 692   Oakley 672   Benicia 325   Morgan Hill  261  
      Union City 654   San Ramon 553   Dixon 227   Palo Alto 247  
      Newark 404   Martinez 497   Rio Vista 93   Sunnyvale 221  
      Castro Valley 394   Walnut Creek 483         Los Gatos 150  
      Dublin 372   Hercules 473         Campbell 132  
      Pleasanton 352   Danville 370         Mountain View 82  
      Berkeley 312   Pinole 272         Saratoga 46  
      Emeryville 311   Lafayette 93         San Martin 35  
      Alameda 304               Cupertino 31  
    . San Lorenzo 261               Los Altos 22  
      Albany 46               Alviso 11  
                             

     

  • Best practices documents

List of local cities that have SB 1137 ordinances in place, including links to the ordinances.
The comments to the right of the cities provide some background information.

Oakley

Rather than driving through town and seeing ‘sale pending’ and ‘sold’ signs you are now more likely to see ‘short sale’ and ‘foreclosure’ signs. The Oakley City Council has taken a pro-active approach to help set and maintain a minimum level of maintenance guidelines for residential properties. Staff proceeded to prepare a Neighborhood Preservation Ordinance which establishes minimum maintenance standards for single family residential lots 15,000 square feet and below. The Ordinance applies to both rental units and owner occupied homes since they can both look the same with proper maintenance.

Rental Dwelling Unit Inspection Ordinance ensures that rental properties are maintained in an acceptable manner. Many cities in California throughout the Country have implemented similar programs. Both the City of Antioch and Brentwood have implemented rental property inspection programs as well. Owners of Rental Properties are now required to register their rental properties with the City so that the City can do an annual inspection of the exterior of the rental unit(s).

Richmond

  • The ordinance

  • Letter from Mayor Gayle McLaughlin encouraging Hayward to pass a similar ordinance

Richmond struggles to hold banks accountable for blight, By Hannah Dreier
Contra Costa Times Posted: 09/09/2011 04:40:51 PM PDT- says Richmond collected $780,000 in fines in the last year, but missed $255,000.  http://www.tombutt.com/forum/2011/110912a.html

Oakland

 

California Foreclosure Process - an overview

 

Before hearing of SB 1137 this article appeared in Calitics.com:  

Banks neglect cost lives  by Ellis Goldberg  Sun Jan 02, 2011

It did not have to happen.  The December 29, 2010 fire in Oakland took the lives of a man, a young mother and her child leaving a seven year old. SEE NEWSCAST  The bank / property owner failed to install smoke alarms in the Oakland apartments which the bank owned since 2007. Many banks are foreclosing on properties where people live and are failing to take the responsibilities that property ownership requires.

Banks foreclosing on condominiums frequently stop paying real estate taxes and home owners association (HOA) fees causing the remaining homeowners to make-up the shortfall. The HOA usually puts a lien on the condo to recover the arrears HOA fees, which may be paid only after back taxes. The bank then tells the HOA it has a buyer who won't cover the arrears HOA fees. The bank makes the HOA a take it or leave it offer. If the HOA leaves the offer then the remaining owners will continue to cover the shortfall.  

Banks frequently do not keep up foreclosed properties nor do they assure the properties are safe and secure so they don't turn into crack houses or catch on fire, like the one in Oakland. 

Legislation that reverses this situation with teeth that penalizes banks for violations would make the banks want to negotiate as an alternative to foreclosure. The legislation should state:

• Banks that foreclose must continue to pay HOA membership fees and real estate taxes - on time.

• Foreclosed property must be kept safe and maintained so as not to drive down near by property values.

• Foreclosed property must be safe and secure to assure that it is not vandalized or used for illegal purposes.

The benefits of legislation that supports these concepts include:

• Improving public safety and health of those occupying foreclosed property and those near by.

• Protecting home owners who had no role in the foreclosure from rising HOA fees and decreasing property value due to neglected near by properties.

• Making the decision to foreclose more painful for the banks;

  • Reducing the number of foreclosures

  • Increasing the number of re-negotiated mortgages  

A property owner has a responsibility to make the property safe, clean and up to pertaining codes. The owner can face criminal penalties when neglecting those responsibilities results in damages. Frequently banks shirk those responsibilities. In Oakland it resulted in fatalities.