More than just an eyesore
For residents in cities where foreclosures are low, or are being snapped up by investors, it is difficult to understand exactly what an abandoned foreclosure home means for a neighborhood. It’s more than just an eyesore, as some banks fail to maintain the abandoned property, which to them is no more than an address in a ledger, and in some areas, the homes are claimed by squatters and even gangs.
The National Association of Home Builders (NAHB) reports that metal bars on windows, poor roads, or bad smells can hurt a homes value by more than $6,000, so imagine what a blight home does to nearby home values. The NAHB says that an abandoned building within half a block knocks $28,000 off of a home’s value.
Los Angeles taking action
According to The L.A. Times, the city of Los Angeles is suing U.S. Bank, alleging that the lender poorly handled over 1,500 foreclosures in the city, 150 of which had fallen into blight status of disrepair, leaving neighborhoods victim to these abandoned homes as they drag values down and become home to gangs and squatters.
In addition to allegations of allowing blight homes to destroy neighborhoods, L.A. alleges that U.S. Bank illegally evicted some tenants in properties that had been foreclosed, while allowing other tenants in buildings to remain in poor living conditions.
The city sued Deutsche Bank for similar misdeeds, and the two banks claim that while they hold the deeds, their defense remains that the mortgage servicing companies hold responsibility for the maintenance of all properties.
U.S. Bank denies responsibility
“Like the city attorney, we are troubled by properties that are not maintained, which have a corrosive impact on neighborhoods and communities,” a U.S. Bank Senior Vice President told the L.A. Times, noting that the bank has “made multiple requests of the city over the past couple of years to obtain detailed information on properties they considered to be in disrepair in order to immediately identify and work with the responsible servicer to address outstanding issues. Until very recently, the city has refused to provide us with that information.”
The city of Los Angeles vehemently objects, as court documents show the city asserting that “U.S. Bank National Assn. disregarded virtually every one of its legal duties and responsibilities as owner, resulting in the creation and maintenance of an alarming number of vacant nuisance properties.”