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. 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;
o Reducing the number of foreclosures
o 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.
Contact your elected officials while the memory of this tragedy is still fresh in your mind. Pass this on.