STOCK MARKET WATCH -- Tuesday, 12 June 2012

[Demeter]

69. Banks Booting Families and Leaving Homes to Rot: A Tour of Blighted Homes in Los Angeles

http://www.alternet.org/story/155734/banks_booting_families_and_leaving_homes_to_rot%3A_a_tour_of_blighted_homes_in_los_angeles?akid=8921.227380.UTtsTo&rd=1&t=25

Los Angeles has an ordinance that fines banks for leaving foreclosed homes in disrepair. So why are so many of them blighted, dragging down whole neighborhoods? We know the foreclosure crisis began with the lies. The banks gave home loans to anyone with a pulse, provided they had another sucker institution lined up to buy the loan. How did they make these loans in the first place? By committing every kind of lending fraud imaginable—particularly by entering fake data on home loan applications magically turning minimum wage janitors into creditworthy wage earners...In 2006, according to report by Credit Suisse, a whopping 49 per cent of the nation’s subprime loans were “liar’s loans,” meaning that lenders could state the incomes of borrowers without requiring any proof of employment.

n May 2010, the City of Los Angeles passed a Foreclosure Registry Ordinance designed to “protect neighborhoods from becoming blighted.” The ordinance requires banks to register properties with the city of Los Angeles that they have foreclosed on or as soon as they begin the foreclosure process by issuing a Notice of Default (NOD). It imposes tough fines of up to $1000 per day on banks that fail to maintain those properties.

Two years later, bank-induced blight continues to ravage our neighborhoods, yet not even one bank has been fined for violating the ordinance. Because of a major loophole which lets banks register for free with a banking industry-created private service known as the Mortgage Electronic Registration System (MERS), only about 21% of foreclosed and foreclosing properties in Los Angeles have even been registered with the city. MERS does not provide the city lists of the properties registered with it, depriving officials of the information needed to police bank-induced blight. Examples from other cities demonstrate that stronger enforcement could produce much better results than we have seen in Los Angeles...