Ian Anderson 12:15 p.m., Oct. 21
A Better San Diego's Breakfast Forum Talks Foreclosures
A Better San Diego, a community group put together by the San Diego and Imperial Counties Labor Council, held the second installment of a monthly breakfast forum focusing on community issues this morning. The topic of discussion was foreclosures, and their impact on San Diego.
Corinne Wilson of the Center on Policy Initiatives was the first of two presenters. She noted that one of every five foreclosures nationwide occur in California, and estimated that one-third of homeowners in the state are “underwater,” owing more on their mortgages than the value of their homes.
A report produced by the Center last June estimates that between 2008 and the end of 2012, the City of San Diego alone will see nearly 57,000 foreclosures. These foreclosures, selling at reduced prices, will account for over $19 billion in wealth lost by homeowners and with it $117 million in reduced property tax revenues.
“The foreclosure crisis has basically decimated the American dream,” said Wilson.
The existence of abandoned homes awaiting resale can attract a criminal element as well, Wilson says. She cites a study that found for every 1 percent increase in an area’s foreclosure rate, a 2.33 increase in neighborhood crime followed.
One measure suggested for the management of foreclosures in order to minimize the negative impact they have on neighborhoods in which they’re located is a foreclosure registry program. Under such a program, lenders would have to pay a fee and register properties in foreclosure – monies raised would then pay for city inspectors to monitor homes to ensure they’re secure and maintained in a fashion that doesn’t negatively impact the neighborhood. Such a program would also give the city authority to fine banks as much as $1,000 per day if they failed to maintain properties in a responsible manner. Chula Vista was one of the first cities in the nation to implement such a law, which has been on the books for several years.
Dave Lagstein of the Alliance of Californians for Community Empowerment also presented. His group has been active in assisting homeowners attempting to avoid foreclosure, sometimes participating in direct actions that have gone as far as mobilizing protesters to stop post-foreclosure evictions and force banks to re-negotiate loan modifications to keep homeowners from losing their properties.
A solution Lagstein proposes to the foreclosure problem before homes end up bank-owned is ending the practice of “dual tracking” by lenders. Under this system, which is used by all major lenders today, a bank’s foreclosure department may act to repossess a home even while a borrower is attempting to negotiate a loan modification or short sale with another department, resulting in many foreclosure avoidance requests not being processed before the bank acts to foreclose.
It was further proposed that lenders consider principal reduction as a major portion of any reform efforts, which is indeed part of the $25 billion multistate settlement reached involving five major lenders recently.
“There are two million homeowners in California who are underwater, by a total of $200 billion. If all those homes were reset, if those homeowners were able to get a principal reduction on their loans, they would save $810 a month . . . that would bring $20 billion back into the economy,” Lagstein offered.
Lagstein also noted that when San Francisco County Assessor Phil Ting reviewed a sample of 300 foreclosure actions, errors were found somewhere in the process a full 80 percent of the time. He called for a similar audit to be completed in San Diego by Assessor Ernest Dronenburg.
Elected officials who had representatives present included state Assemblymember Marty Block, Congressman Bob Filner, and state Senator Juan Vargas.
More like this:
- Wells Fargo lawsuits to proceed — Aug. 12, 2013
- Fewer foreclosure filings — Nov. 15, 2012
- Foreclosure fees — Nov. 14, 2012
- Foreclosures up but inventory down as investors snap up property — Oct. 15, 2012
- S.D. Realtor Says Bank Failed to Follow Federal Assistance Program Guidelines — March 19, 2012