L.A. launches new effort to clean up foreclosed properties

A dilapidated South Los Angeles home with tall weeds, a fallen fence, broken windows and graffiti was chosen to serve as the backdrop for a news conference Saturday as city officials announced the launch of new efforts to clean up foreclosed properties.

The beige stucco bungalow on West 77th Street is a neighborhood eyesore, playing host to drunken transients and stray animals and reeking of urine and feces, neighbors said.

“A lot of vacant homes have become a nuisance in the neighborhood because of the foreclosure crisis,” said Betty Steele, one of several community activists who canvassed the 77th Street neighborhood encouraging residents to report problem properties via the city’s 311 hotline. “And the banks should be held accountable for cleaning them up.”

City officials said they hope an ordinance that took effect Thursday will help building inspectors identify the banks that own such foreclosed and abandoned homes and — with the threat of stiffer fines — encourage them to keep them clean and safe.

It is the city’s latest attempt to deal with neglect at many of the 27,000 foreclosed homes in Los Angeles. It allows the city to levy fines of up to $100,000 against financial institutions that seize homes and allow them to fall into disrepair.

It starts by addressing the limbo period between when a lender issues a mortgage default notice and the point that the title transfers to the lender. Banks often don’t consider the properties their responsibility until after they take the title. The ordinance now makes them responsible as soon as they issue a default notice.

At the 77th Street home, city inspectors have cited the property for code violations three times since June 22. But it was only after the news conference was scheduled there that a work crew was sent to whack the weeds and right the fence.

Councilman Eric Garcetti, who sponsored the ordinance along with district Councilman Bernard Parks, said the cleanup crew chief told him that he got the work order Friday.

“They said it was urgent,” Garcetti said. “Well, there are a lot of other neighborhoods where the need is urgent.”

Mike, a college student who lives next door in a neat, two-story home with a green lawn but didn’t want his last name used, called the house “a biohazard.”

“I feel bad that my little sister has to live next to this,” he said.

City officials said it can be hard to identify bank owners because property records lag behind property transfers, and the foreclosure market is very fluid. The ordinance now requires banks to register their inventory of homes in default with the city. That registry should allow inspectors to easily identify owners when constituents call in to complain about a property.

The ordinance also allows the city to fine bank owners $1,000 a day per code violation.

“The banks are responsible for taking over the properties,” Parks said. “They need to be responsible for taking care of the properties.”

A spokesman for the California Mortgage Bankers Assn. said the ordinance creates unnecessary paperwork for lenders because property records already are publicly available.

“Increased bureaucracy is not the answer,” said Dustin Hobbs of the association. “Lenders and banks have a vested interest in keeping up homes because the better condition the house is in, the more money they are going to recover when they sell that house.”

The Federal Home Loan Mortgage Corp., known as Freddie Mac, is listed in property records as the owner of the home on West 77th street. The city sent nuisance notices to Freddie Mac and posted them on the door. But Freddie Mac spokesman Brad German said the company’s sales division had not received notice of the citations.

Once a title transfers to Freddie Mac, he said, the company’s sales division, HomeSteps, takes over and usually assigns maintenance duties to an outside contractor. German said the company owns some 58,000 homes nationwide.

“Our listing agents are responsible for visiting each of their HomeSteps listings at least once a week to make sure they are secure and well maintained,” German said. “We are also committed to moving quickly to address issues when they are brought to our attention.”

lisa.girion@latimes.com