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Cleanup: Banks must maintain foreclosed homes

July 3, 2008 |  7:58 am

K2f2uzncNews item: A foreclosure-prevention bill headed for the governor's signature in Sacramento requires the owners of foreclosed homes -- banks and lenders -- to maintain the properties. It's not clear that such a law would be enforced (who inspects foreclosed homes?), but this is a start. From today's L.A. Times: The bill "...authorizes local governments to force lenders to maintain property that is sitting empty after a foreclosure.

The headline on the bill -- passed by the Senate and awaiting the governor's signature -- is that it requires earlier notice to homeowners at risk of default: "The legislation, which passed on a 32-8 vote, would require lenders to give homeowners more -- and earlier -- warnings that their home loans were heading toward default."

Presumably, earlier warnings will give homeowners a better chance of working with their lender, or lenders -- remember, many have more than one loan -- to restructure their mortgages.  Related news item: Loan workouts under the government-brokered Hope Now program actually decreased in May: "U.S. mortgage servicing companies helped 170,000 homeowners modify loans or set repayment plans to avert foreclosure in May, a 7% decrease from the previous month, according to an industry survey."

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