Ignored Foreclosed Homes: Who’s Responsible?

CNNmoney says in a complaint filed last month, the Los Angeles city attorney’s office accused U.S. Bank of contributing to crime, blighting neighborhoods, and harming property values by failing to maintain 170 foreclosed properties. With 3,000 branches in 25 states, the nation’s fifth largest bank is being called the largest slumlord in LA. The bank says the mortgage servicer that’s been collecting payments is responsible for maintenance, that the bank is merely the trustee. In some instances banks have the mortgages on their books. In the case of securitized loans, a trustee will distribute payments from servicers to the bondholders who own the mortgages, thereby complicating the responsibility for the property. As MHProNews has learned, according to LA City Assistant Attorney Tina Hess, trustees need to assume responsibility if the servicer fails to maintain the property. RealtyTrac says the number of foreclosed homes owned by lenders has dropped from one million in January 2011 to approximately 620,000. Daren Blomquist, vice president of RealtyTrac, says the longer they sit, the more likely they fall into disrepair, causing neighborhood values to plummet.

(Photo credit: Jillian Berman/Getty Images)

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