A measure to strengthen Los Angeles' foreclosure registry took a key step forward Wednesday when it won the blessing of two City Council committees.
The measure would add a new fee on bank-owned foreclosures to fund inspections in a bid to keep empty houses from deteriorating and dragging down the value of neighboring homes.
A joint meeting of the council's Budget and Finance and Housing committees voted 5 to 0 to recommend the measure, which will now go to the full City Council, probably within the next few weeks, said a spokesman for its sponsor, Councilman Gil Cedillo.
The 4-year-old program has come under increasing scrutiny at City Hall in recent months, with community groups, some council members and Controller Ron Galperin saying the registry is failing to reduce blight from vacant foreclosures.
More than 5,100 houses are currently registered, but the city's Housing and Community Investment Department estimates that at least 1,800 foreclosures in the city are not, and a $250-per-day fine for failing to register is not collected. Meanwhile, the city's Department of Building and Safety, which inspects single-family homes for code violations, does not use the registry to track down owners.
Cedillo's measure would streamline the registration process and assess a fee — not yet determined — on bank-owned property to fund proactive inspections by the building department.
Legal questions remain about the measure, though, particularly after mortgage giant Fannie Mae won a lawsuit last year against the city of Chicago over portions of a similar program there. The vote Wednesday came after a lengthy closed-door meeting with the city attorney's office on the implications of that suit, and the city attorney must draft any legislation before it is finalized.
In a public hearing before the vote, representatives of several local business groups spoke on behalf of the banks, saying that boosting fees to fund inspections may not be the best way to help homeowners and neighborhoods.
"Banks and the city want to keep folks in their homes," said Ruben Gonzalez, senior vice president for public policy at the Los Angeles Area Chamber of Commerce. "There are just so many questions [about the registry] that have not been answered. We need to see if the ideas we thought of in 2009 still make sense."
Those banks are blurring the issue, said Peter Kuhns, Los Angeles director of the Alliance of Californians for Community Empowerment, which has been pushing for a tougher registry. The problem is that bank-owned houses are dragging down neighborhoods, and proactive inspections paid for by the registry are a tool to prevent that, he said.
"This is not complicated," he said. "Other cities have done this for years. It's time for the city of Los Angeles to do this as well."