California has suffered the worst battering from the foreclosure crisis having accounted for a fifth of all the foreclosures in the country. From 2008 there have been 1.2 million residents of California who have seen their homes vanish. It is apprehended that by the close of 2012 the number will touch 2 million. Over a third of house owners with mortgages have gone underwater – the value of their homes being less than the loan due amount.
This has caused the value of residential property to have tumbled by $632 billion. It means a loss of property tax of over $3.8 billion. A single foreclosed unit in a locality can bring down value of property for the other houses in that area; a cluster of residents further devastates the socio-economic scenario.
The local governments are now facing an increase in expenditure calculated to be $17.4 billion covering four years because of the foreclosure mess; this is happening at a time when the revenue from property has gone down for the local administration. The added chores of the local government relate to public safety, maintaining the vacant units, inspecting these, arranging for trash removal and providing emergency shelter; water and sewerage taxes also remain unpaid. Thus unless the foreclosure crisis is resolved the fiscal crisis of California cannot be addressed. At this juncture it is not a sensible thing to make cuts in the local and state budgets to permit the banks of Wall Street and their swollen CEO’s to squeeze billions more out of the states. It was the banks that were responsible for the housing mayhem thanks to their predatory lending operations and they now have to be part of the solution. Assemblyman Bob Blumenfiedl (Democrat/Los Angeles) has tabled a bill – Foreclosure Mitigation Fee (AB 935).
Currently it is passing through the hearings in the legislature. If the bill becomes law the banks will have to pay for foreclosure expenses. The bill has the backing of a wide group of consumer coalitions as well as labour and community groups.
It will levy a fine of $20,000 for each case of foreclosure. If the bill is passed in California it will show other states a step to be emulated; it will infuse zest into activities aiming at reigning in Wall Street. The levied fee would create revenue of $12 billion for the forthcoming two years.
This would be used entirely for the local communities to offset the harm done by foreclosures. Karen Anne, has been working on foreclosure1.com studying the foreclosures market, helping buyers on the finer points of bank foreclosures. Try to visit foreclosure1.com and begin your house foreclosures search.