Credit unions and other financial institutions that foreclose on property in the city of Los Angeles will now have to make sure the foreclosed property is maintained while in foreclosure.
According to the California Department of Financial Institutions the new law, which went into effect on July 8, holds mortgage lenders responsible for cleaning up foreclosed properties "to prevent further blight and nuisance." Further, the mortgage lenders will begin to be responsible for a foreclosed property from the point they file a Notice of Default on the borrower.
The measure also requires lenders to register their portfolio of defaulted properties with the city to help building inspectors identify the property, which will allow people living near the foreclosed properties to complain to the city if they are not maintained.
The new law also has teeth.Mortgage lenders who are found not to have maintained their foreclosed properties can be fined $1,000 per day, per violation, up to $100,000.