California Town Forces Large Banks to Maintain Repo Homes
A small town in California is fighting the country’s largest banks which allow their repo homes to deteriorate and contribute to neighborhood blight.
Last year, the desert town of Indio has enacted a law that authorized city officials to charge banking companies with criminal misdemeanors if they allow their repo homes in Indio to deteriorate into blighted conditions.
Indio was forced to criminalize things such as neglecting algae in pools because the whole town of Indio was being blighted by abandoned repo homes.
In the past several years, houses sprouted in Indio as failing date farms were turned into subdivisions by investors. When the mortgage market collapsed, the town became littered with repo homes, with 1 house in every 10 housing units receiving a default notice or foreclosure filing.
Brad Ramos, the town’s longtime police chief, said the entire town was falling apart because the country’s leading banks which now own Indio’s repo homes were ignoring the run-down conditions of the repo homes.
Gene Gilbert, mayor pro tem of Indio, said if the town allows the banks to neglect their repo homes, the town would suffer from a depressed local real estate market for the next several years.
In one instance, police chief Ramos warned Citigroup’s office in Saint Louis in a long-distance call to fix an algae-infested pool in one of their repo homes or be served with a warrant of arrest.
Citigroup later paid a fine of $3,450 to the town of Indio and then sent a crew to clean the pool.
After the banks realized that Indio was serious about its law, J.P. Morgan Chase’s Washington Mutual sent a real estate broker to water dead grass in one of its repo homes. Fannie Mae paid some people $7,000 to fix broken windows and remove a dead tree from a yard.
Countrywide, among the banks with the most number of repo homes in the area, has hired local real estate brokers to maintain its repo homes.
Indio is part of the Coachella Valley, which was developed as the eastern frontier of the Los Angeles market during the housing boom. In the year 2000, it had only around 49,000 residents. The housing boom encouraged migration to the town to increase it to about 81,000 residents today.
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