California Bill Would Charge Banks $20,000 for Each Foreclosure

[The Straight Story]

California Bill Would Charge Banks $20,000 for Each Foreclosure

A California lawmaker wants to stem the rate of home foreclosures in his state by requiring banks to pay $20,000 every time they seize a property.

Democratic Assemblyman Bob Blumenfield, author of the Foreclosure Mitigation Fee (AB 935), proposed $20,000 because that’s about the estimated cost of each foreclosed home on local governments, which lose valuable property taxes and have to cover property maintenance, inspections and increased police services when homes are reclaimed by the bank.

Proponents say the legislation would raise $12 billion over the next two years, which would go entirely to local communities now burdened with foreclosure costs.

It is estimated that more than 1.2 million Californians have lost their homes since 2008. That figure is expected to eclipse two million by the end of 2012.

http://www.allgov.com/Where_is_the_Money_Going/ViewNews/California_Bill_Would_Charge_Banks_20000_Dollars_for_Each_Foreclosure_110503

[GSLevel9]

1. Great idea, I love it.

[drm604]

2. Banks don't have to pay property taxes and maintain their properties?

How the hell is that right?

[sharesunited]

3. Property taxes are usually treated as a super lien which cannot be cleared through foreclosure.

Tax buyers can seize title from banks if the taxes are delinquent.

The process takes a long time, and revenues to local governments do become impaired, while the problem of blight accelerates.

A proposed "solution" like this sounds pretty futile, however. Banks seldom absorb the cost of such fees, and usually find a way to pass it on to buyers and sellers in the ordinary course of closing real estate transactions.

[Celebration]

4. when the banks sell the properties

Surely the back taxes are taken care of during closing (???)

I think that better legislation would be to charge a higher interest rate on back taxes--at least as much as the banks charge for credit card payments made a day late!! Say, uh 30% to 40% rock bottom. Could make them want to keep up with property taxes rather than foist them off on the purchaser.

[drm604]

5. Not being in real estate I don't even understand your explanation

so I'll just take your word that that's the way it is.