A new report shows the extent of Wall Street foreclosure costs to Californians, and state legislator and community groups announce new legislation to require Wall Street to pay for damages. The report can be found by clicking here.
On Wednesday, homeowners and their supporters held events throughout the state to announce the RE-Fund California campaign organizing to push legislation that will reduce foreclosures and raise roughly $8 billion in revenue annually over the next few years. The group called on the banking industry to stop costing California communities and to support the solutions to the crisis the helped create.
The report, Home Wreckers: How Wall Street Is Devastating Communities, brings to light the full impact of the foreclosure costs statewide and for each county that adds up to a minimum of $650 billion and as much as $1 trillion. This report is the first time the full set of costs to homeowners and taxpayers have been quantified in California — the hardest hit of all states with the most number of foreclosures. The costs to the state outlined include:
Homeowner Cost: Home value losses to foreclosed homes and neighboring homes total a minimum of $632 billion—$337,379 value loss per foreclosure to the surrounding community.
Property Tax Cost: As housing values decline, property tax revenue losses are estimated to at least $3.8 billion– $2,058 property tax loss for every foreclosure.
Local Government Cost: Foreclosure-related costs for multiple agencies and multiple levels of government for maintenance of blighted properties, sheriff evictions, inspections, public safety, trash removal, and other costs are estimated to be $17.4 billion and higher—$19,229 cost for every foreclosure.
The legislation in one of three bills in the Homeowner Protection Package — a bold set of policy solutions to address the foreclosure crisis, including:
Wall St Foreclosure Fee to Recoup Losses – AB 935 (Blumenfield): This bill would impose a fee of $20,000 on a foreclosing party in order to mitigate the economic impact of foreclosures on cities, counties, schools districts and the state.
Fair and Legal Modification – SB 729 (Leno/Steinberg): This bill would require loan servicers to give homeowners a yes or no decision on their loan modification application before beginning the foreclosure process. It also allows homeowners to bring legal action with specified remedies when serious violations occur.
Mortgage Title Transparency – AB 1321 (Wieckowski): This bill would mandate recording of all mortgage deeds/trusts and assignments, and payment of the requisite fees. It would also require that the mortgage note be filed prior to issuing a Notice of Default to ensure that the foreclosing party has the right to foreclose.
“The big banks caused the economic collapse, got bailed out with taxpayer’s money, are back to paying themselves millions in bonuses, and what do we get?” asks Peggy Mears, a leader of the Home Defenders League. “Californians are paying the price, over and over again, for the greed of the big banks.”
“Foreclosures uproot families, devastate communities, and contribute to our budget crisis,” said Blumenfield. “While some profit from it, our state pays the hidden costs of foreclosure. My bill will help stop this downward spiral by creating a financial incentive to help keep families in their homes.”
The coalition is led by the Home Defenders League (a project of the Alliance of Californians for Community Empowerment), PICO CA (People Improving Communities through Organizing), CRC (California Reinvestment Coalition) and SEIU Locals 1000, 521, 721 and 1021.