Jail time for dirty pools and dead lawns?
Fearing blight, a California town makes it a crime to neglect foreclosed homes.
Officials at a Citigroup Inc. office in St. Louis placed a call to Indio, Calif., recently. The bank had caught word that the desert town was coming after the lending giant with fines and threats of criminal charges. The offense: an algae-infested swimming pool at 79760 Eagle Bend Court.
Citigroup wound up in charge of the foreclosed home, one of thousands of such properties it was managing across the country. But last year, Indio passed a law that allowed it to charge banks with a criminal misdemeanor if they allowed a home to fall into disrepair.
"If I need to do it, I'll say, 'Mr. Bank President, if you don't come and take care of your property, we're going to come arrest you and take you to court in California,'" says Brad Ramos, Indio's long-serving police chief.
The hard-line approach is part of this town's attempt to gain leverage over some of the nation's largest lenders. A couple of years ago, Indio was a real-estate bonanza. Old date farms were closing down, sprouting subdivisions in their places. Today it's a different scene, with one in 10 houses either in default or foreclosure.
The upshot is that faraway banks have become the de facto landlords of Indio, and people here say the absentee lenders are letting the whole valley fall apart. Houses "look like dust bowls," says Gene Gilbert, the mayor pro tem, who adds that a glut of run-down homes may depress his hometown's local market long after the recession ends.
Criminalizing things like algae in a pool has given Ramos a stick to make lenders snap to attention. Without that threat, the police chief says, "far-off banks, billion-dollar corporations, they could simply ignore us."
A Citigroup spokesman says the bank never meant to ignore Indio and all along had "tried to maintain the property in good condition." After the letters from Indio, Citigroup paid a $3,450 fine to Indio and sent a cleaning crew to fix the pool at Eagle Bend Court, where Citigroup had managed the foreclosure process.
Ramos has organized his department to focus on this new type of crime. Uniformed officers make weekly sweeps through subdivisions, casting about for infractions such as dead landscaping. Financial institutions from Seattle to New York are finding themselves providing new services that include pruning bushes and watering cactuses.
On Austin Drive, J.P. Morgan Chase & Co.'s Washington Mutual bank had a real-estate agent water some brown grass after receiving a warning from Indio. On Palm View Street, Fannie Mae spent $7,000 to remove a fallen tree and took care of a few broken windows. Indio says it's still pursuing Bank of New York Mellon Corp., the trustee of a property on Avenida Linda Vista where weeds were "four to five feet tall."
Lenders say that such repairs and upkeep are part of the normal course of business, and that Indio's ordinance hasn't prompted any special actions. A Washington Mutual spokesman said local real-estate agents send in photos of bank-owned properties so the lender can watch for disrepair from afar. A Fannie Mae spokeswoman said the lender's first goal is to "stabilize neighborhoods." New York Mellon said its role as trustee didn't merit citations from Indio.
Even before the mortgage crisis became full-blown, big cities like Cleveland and Buffalo, N.Y., had fashioned laws to browbeat banks into taking care of urban blight. Now some small towns are also taking matters into their own hands.
Indio's neighbors Palm Springs, Desert Hot Springs and Cathedral City each pushed ahead with laws much like Indio's. The town's own ordinance was fashioned off a 2007 law in Chula Vista, a city south of San Diego that began fining lenders up to $1,000 a day for unsightly or dangerous code violations such as broken windows.
"These lenders speak one language: money," says Doug Leeper, the Chula Vista code-enforcement manager, who says he has issued around $1.4 million in fines against lenders. So far, he's collected half the fines and has plans to wrangle the rest through tax liens when the homes are eventually resold.
Indio's gruff Ramos, however, is pushing it beyond tax liens, equating the matter to "arresting the guy that robs a bank." Any softer approach would put the city's home prices in further free fall, he says.
A former railroad pit stop, Indio was founded a century ago deep in the Mojave Desert's Coachella Valley. For decades, it scraped by as the "Date Capital of the World." But about 10 years ago, life began to change.
The booming Los Angeles housing market — centered more than 100 miles away — expanded to claim the Coachella Valley as its eastern frontier. Indio's population, about 49,000 in the 2000 census, swelled to an estimated 81,000 today. A new land rush was on.
Longtime residents worried that the boom times wouldn't last. Ramos recalls looking at a map of developments pouring across old date fields and thinking: "I know our median income. Who is keeping up with the payments?"
By last year, some of the city's new developments were turning into pockets of decay and neglect. Million-dollar homes were being stripped of metal. New houses in gated communities became the domain of squatters.
In March 2008, Gilbert penned a new law requiring banks to register homes the moment they went into foreclosure so the city could monitor if they were being maintained. Fines could pile up past $25,000 if the properties were found to be in disrepair. In a bold move that took its measures beyond mere civil offense, failure to comply was deemed a criminal misdemeanor that could lead to an arrest.
City officials say they ginned up a campaign to notify the banks about the new law, but few took action. "The banks were trying to test us to see if we were serious about this," says Jason Anderson, a code-enforcement officer in Indio.
Countrywide, one of the biggest lenders in the area, initially just tried to make the problem go away by writing checks, city officials say. Instead of attending to the upkeep on the properties, they'd ask, "How big was the fine?" Anderson recalls.
City officials say Countrywide has since become one of the most proactive lenders, contracting with local real-estate agents to monitor properties and paying for gardeners to handle the upkeep. "There's considerable financial incentive for the bank" to maintain properties, a Countrywide spokesman said.
This article was written by Nicholas Casey for The Wall Street Journal.
If the lenders really wanted to unload these homes, then why not let people stay in the homes. I think that they are just waiting for the market to come back online. The damage is done. Neighborhoods that were once safe havens for parents to let their children play outside after the street lights came on, have turned into single home juvenile dentin centers. Parents must make sure that they have their children inside and planted firmly in front of the TV computer or video game. Crime rates rise, people move in droves because of the changes in the neighborhood, and those people who once lived in their homes are now landlords. This is all because the banks will not give homeowner a chance to recover, a chance for their home to remain a home and not a rental unit.
And by given the home owner a change to recover I mean a chance to stay in their home and a chance to save their neighborhoods. There are some simple steps that can take place; give them a reduction in their home payments. If it is a case that the family income has been lost let them stay there and pay for the taxes and water bill, do a income review every 3 to 6 months and adjust the payments as their income increases. Also you can let some of these homes sell on land contract with a low down payment to people who have a proven track record with rent payments. You could also make it easier for people of low income to buy these homes. Some are selling for as little as $500. Why pay $600 a month in rent when the bank could invest 10k to fix up the home sell it to the renter for 15k . There are so many simple solutions to this problem.
It takes a lot to let people have investments worth thousands of dollars, but it is even better to invest in the American neighborhood. Many of the homes that are up for auction on the websites such as HUD and County tax auctions are being sold to people in other countries, who plan to slap a coat of paint on them and rent them out. They feel that even if they only get the security deposit, they would have made back 3 or 4 times the amount they paid in some cases.
It's time to reinvest in the American family. Banks need to let these homes go to people who are willing to pay for them in the state that they are in. People who are willing to make them their homes.
Wake the F*** up America! These "institutions" and their investors are running us into the ground!!!
I personally am glad that the banks will be fined, maybe this way the banks will think twice about making the owner foreclose thier home and instead give them a better mortgage that they can afford to avoid the fine's and costs of maintaining the home. I hope that the fines increase exponentially if the banks refuse to do anything about the homes they own. West nile virus is a real threat. It is good to see that people are taking thier heads out of the ground and actually facing the problem this time.
I once dated a guy who lived in Riverside NJ where they did something like this. One day they decided to go around and give people tickets for not mowing their lawn. No warnings, just a ticket. The woman behind it said that it would make the town look better.
Guess what? It really had no effect on the broken asphalt in the roads.
The government does not belong doing things like this. It's fascism.
Thank God!!!!! There is no crime and we can go after corporate America for the heathens they are!!! Ok Chief Ramos, Can we finally address real issues like reckless farting? Can we enact laws to address stink breath?? Can we enact laws like failing to properly flush a tiolet? Ok, here's one: Can we finally get laws passed to arrest obese women who wear tight pants and claim that they look good????? To arrest presidents for some grass and/or algea growth is just ridiculous when we have the real problems like I just mentioned!!!! We need to take a stand my fellow Americans and address those issues!!!!!
C'mon, is this portion on California a part of the United States?????
Wow, crime must be totally under control to be able to concentrate on arresting bank presidents!! Ok, since we are going there "Chief Ramos," how about enacting laws addressing reckless farting?? How about laws to arrest those with stink breath? How about laws to arrest those who think bad thoughts? What about arresting those who don't flush the tiolet?? Ok, here is good one. What about arresting those disgusting obese women who wear tight pants and profess they look good! Those are the real people you should be arresting. To arrest a president for some algae growth is ridiculous. We must stand together as Americans and fight for these provisions, otherwise, we are all doomed!!!
C' mon people, is this a portion of California that is seperate form the United States???