Monday, May 23, 2011

Foreclosure Blight and the Responsibility of Banks

Banks have become homeowners, and so it stands to reason that banks should be treated like homeowners when it comes to blight:

[...] the foreclosure crisis is riddling communities with blight because no one wants to shoulder the responsibility of maintaining foreclosed homes.
"There's one on every block," said Elenes, a community organizer with the Alliance of Californians for Community Empowerment in Watts, a low-income South Los Angeles neighborhood pockmarked with foreclosed homes. "All we want is for the banks to step up and be good citizens."
Communities across the nation have made little progress in getting banks to maintain foreclosed properties, and as the ongoing crisis matures and bank-owned homes fall into advanced stages of disrepair, cities and residents are getting desperate. In a keenly watched move this month, Los Angeles forged a new strategy — it sued one of the world's major financial institutions, Deutsche Bank, to force it to take care of 166 properties, both vacant and renter-occupied, charging the blue-chip German giant has turned into the city's largest slumlord.
"The buck stops with the owner of record. We're saying, 'You are an owner like any other owner,'" said Julia Figueira-McDonough, deputy city attorney.

It's only fair. If you want to take away an asset, then that asset becomes your problem, not the problem of the people who live around your blighted property. A severely blighted property can drive down the value of the homes around it--and this creates a liability issue for banks. An entrepreneur could start a company specializing in preventing, maintaining, and rehabilitating blighted properties and the banks should be forced to use that sort of service in order to prevent creating "holes" in neighborhoods all over the country.
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