Should Lenders Maintain Foreclosed Properties? [AUDIO]
Lenders would be required to maintain residential properties that have been foreclosed upon under a bill that's unanimously passed the Senate Community and Urban Affairs Committee.
"The reality is that once you foreclose upon a property, in essence, you own it. You're no different than anyone else. I don't care if you live in California or your business is in Texas, you have to maintain those properties. To do otherwise, is pulling our communities down throughout the state," said bill sponsor, Senator Ron Rice, the Vice Chair of the Senate Community and Urban Affairs Committee.
"We've seen the negative impact of vacant, foreclosed homes falling into disrepair within a community," said Rice. "When a home stands vacant and the property deteriorates, it can bring down property values of surrounding homes, and it can create a magnet for criminal activity. Through this legislation, we're trying to require creditors to take responsibility for the homes they're overseeing, so that these homes do not create a burden for the rest of the municipality."
Under the measure, a municipality would be allowed to require a creditor who initiates a foreclosure proceeding against a residential property located in the municipality to maintain that property in accordance with State and local housing codes if the property becomes vacant during the proceedings. It also would require the creditor to notify the municipality of a property that is being foreclosed upon and provide the full name and contact information of a person who lives in the state and is authorized to accept service on behalf of the creditor.
"Traditionally, the impact of foreclosure has mostly been in urban communities, but given the way the economy has been over the past few years, the impact will become more substantial in rural and suburban communities," said Rice. "From my experience on the local level, I know absentee landlords have posed a real problem. They continue to flip properties and leave them in conditions where they have not been maintained. They are boarded up, they can cause health problems and they just aren't taken care of. This is a matter of health, safety and the environment. We need to maintain the value of our neighborhoods and enhance our economy. We just lost the beach community and we're never going to get that back. We should at least have communities look like communities once again."
The bill now heads to the full Senate for consideration.