Cash For Keys / Foreclosure Problem – What you can do

Cash For Keys and Other Disasters

The Foreclosure Problem in Vallejo and What We Can Do About It
by Ann Jones Smith and David Corbett
Posted by webmaster on 12/08/2011

If you live in Vallejo, chances are there is a foreclosed property in your neighborhood,
maybe even on your block. (There are currently nearly 1,375 such properties within the city limits per
Code Enforcement head Nimat Shakoor-Grantham.) And it is also likely that, over time, the foreclosed
property has deteriorated, been vandalized, and is now a magnet for squatters.

A Personal Story of a Problem Property

I have such a house in my neighborhood, a rather large house on a corner of a busy street. The original occupants
of the house moved away in September 2010, then a large group of people moved in, and everything changed.

Apparently the owner, who was in financial trouble, had leased the house to a troop of methamphetamine addicts.
They trashed the house and the property. There were fights and blatant drug dealing at night. A woman at the
property was beaten badly by a male companion.

Eventually the illegal tenants were arrested and evicted from the house. When they moved out they filled the back
yard, which is visible from the street, with all kinds of garbage, damaged furniture, and household items.

The garbage pile stayed and even grew larger with debris scattering all over the block as the house remained
vacant from about January to April.

The security doors had their locks popped, and at night, when the neighbors slept, vandals came through to strip
the property, removing light fixtures, plumbing, wiring, and even the decorative rock in the front yard.

A steady stream of unsavory characters came and went from the property. Vagrants began staying there overnight.
There was evidence of methamphetamine “cooking” in and around the property.

Didn’t you call anyone? That is the obvious question. The answer is you betcha!

Taking Action — Part One

We contacted a realtor to find out who owned the property — a local bank, who’d foreclosed on the previous owner —
and called the bank but the problem persisted. We followed up with a letter to the bank demanding something be done.
Nothing resulted.

We went through the house as a neighborhood and tried to lock it back up, only to find out that the wooden doors
behind the security doors had been stolen. When we discovered this we called the police, but were informed by the
dispatcher that we were trespassing.

We contacted as many agencies as we could to no avail. Each and every one of my neighbors called Code
Enforcement, which levied fines. But we were told the agency lacks the ability to secure or clean up the property
at the owner’s expense.

The New Tenants (Problem Property, Part Two)

In April, we found yet another group of people trying to move into the house. They said they had a “lease”
issued by the former owner. He had supposedly arranged for them to pay the thousands of dollars in liens imposed
by the city and clean the place up.

These tenants did in fact remove all of the trash from the premises and repaired the locks on the security doors.
They even had the electricity turned on — at which point the house nearly burned down because the wires and
fixtures had been stripped.

After this near disaster I was able to discourage them from moving in. When the former owner was called by
Fighting Back Partnership he said he knew nothing about the latest “tenants” and had “nothing to do” with the
property any more.

The house remained empty for a few months. The neighbors pitched in and cleaned up the property, especially
the front, trying to make it less attractive to squatters and vandals.

Then late one night a UHaul arrived. The next day there were window coverings up and signs that warned us not
to trespass. The new “tenants” told people they had bought the house and that they were the new neighbors.

We figured something was fishy. We called the police (again), but they were unable to do anything. They came
out and learned from the “‘residents” that they had a lease — which was curious, since they’d told the neighbors
they’d bought the house.

A few weeks after these people moved in one of the male occupants attacked several people with a baseball bat.
The police came and he was arrested, but unfortunately he is back. There are frequent fights at the house usually
involving this same man and one of the women who lives there. Small children are living in this vandalized property,
and given the state of the premises and the recurring violence there we’re concerned for their safety.

Though quiet during the day the house bustles with unwelcome activity after dark. We have seen the “residents”
trespassing and stealing from the foreclosed property that is adjacent to it. They dump their trash into our waste
cans at night. All kinds of miscellaneous garbage is piling up in the back yard of the property again.

We have noticed that women who appear to be prostitutes are now using the property. We have seen them standing
on the corner. The nearby streets that are very dark at night are perfect places for the women to take their johns.
One of my neighbors recently witnessed a drug deal at the house.

Taking Action, Part Two—And Bank Inaction

We have reported the activity to the police, and have reported cars that were parked illegally or had expired
registrations. We called Code Enforcement again and were informed that they had closed the case on the house.

After numerous calls to the bank and threatening civil abatement I went into the local bank offices and spoke to
the branch manager. The manager appeared to be shocked and had never heard of a situation like this. In fact,
several representatives of this bank told me they were shocked to hear about the squatters.

Personally, I found this unconvincing. There are reports daily in the national news about these kinds of problems.
I do not know of a neighborhood in this city which is not dealing with this sort of difficulty on a daily basis. Surely
we are not the only Neighborhood Watch group to contact a bank in this town regarding a foreclosed property.

The bank manager finally got back to me after a month. I was informed that the bank would take possession of the
property on October 17th, it would be secured, and the house would go up for auction.

Nothing has changed at the property. On October 18th, I again called the bank manager. I was informed that it
would be two weeks before anything happened.

On October 31, nothing had been done to secure the property. We sent a letter to the bank demanding they
remedy the situation, giving them thirty days before we could proceed with civil abatement action.

Our 30 days came and went. We prepared to take action. I verified the owner of the property, only to find the
major bank we had sent the letter to may have sold the property to another bank. We may now have to start
the civil abatement process again and wait another 30 days.

Cash for Keys

Now comes the truly unbelievable part. In the course of my conversations with the bank manager,
he told me that they would probably pay the squatters to leave the premises — i.e., provide
“cash for keys.”

Note: In some cases, under this same Cash for Keys program, banks have paid squatters to stay
on the property with nothing but a promise not to damage it.

This has become a way for many criminals in this city to make money. No formal lease is required before the bank
just hands over the cash. The banks look the other way, and do not file trespassing charges against the squatters.

For over a year now we have battled this problem. Though weary and frustrated, we continue to be obliged to fight
against these vandals, squatters, and the banks that are effectively their accomplices.

The City’s Response to the Foreclosure Problem

Three years ago the state passed a law specifically mandating that banks secure and keep up their foreclosed
properties, and that other laws are also in place to deal with this problem:

On July 8, 2008, Gov. Schwarzenegger signed a foreclosure relief bill [Senate Bill 1137]
allowing city and county governments to fine up to $1,000 per day the banks that own
foreclosures that are not clean and maintained, according to a report on the official
website for the state of California. This bill specifies that bank owners must keep
foreclosed properties free of excessive foliage growth, trespassers or squatters and
mosquito larva. The banks have 30 days to remedy any problems before fines start.

For more than two years since passage of SB 1137, Vallejo Code Enforcement head Nimat Shakoor-Grantham
has been working toward instituting a foreclosure registration program based upon the state legislation as well as
ordinances in force in San Diego and Riverside counties. (Proponents say the laws are helping, while opponents
say they’re illegal. Establishing clear legal authority has been one of the factors slowing down implementation.)

Shakoor-Grantham hoped to propose the ordinance to the city council at its November 15th meeting, but this
has been postponed. A thirty-day review process will be required by the council, but if approved the program
should be ready to start registering properties in February, 2012.

Exact timing will depend on how quickly Code Enforcement can develop the forms required for the notification
and fee process, as well as how quickly it can update its database to track all foreclosure properties within the
city limits and identify and notify the banks holding title to those properties.

Once the database is updated, the banks holding qualifying properties will receive notice of the new program and
their obligations under it:

Banks will be obliged to register foreclosure properties within 10 days of filing a Notice of Default with the

County. The registration fee will be $109. (The city will be able to track these properties through its own
database, and thus identify and fine banks that do not comply with the registration requirement.)

Banks will be required to monitor the properties once a month to ensure they are being properly maintained.

Note: The city of Indio, California requires banks and lenders to inspect the properties weekly and to
properly maintain them. We believe a weekly inspection provision is applicable for Vallejo given the scope
of the problem.

Banks owning properties in non-compliance with maintenance statues will have 30 days to correct all problems,

or face a fine of $1,000 per day until the problems are rectified. (Shakoor-Grantham expects most banks will
let the fines accumulate and have them paid through escrow upon ultimate sale of the properties. That could,
of course, take months or even years. She receives at least one call a week asking city fines be removed from
escrow on a pending sale, a request she routinely denies.)

Though we wonder how the $109 registration fee amount was established, and believe a higher fee might be
appropriate, given the demands on Code Enforcement to track these properties and compliance with the registration
program, we laud Ms. Shakoor-Grantham’s efforts, and urge the city council to act promptly.

We also recommend the following additional provisions:

Base the registration fee on a fair assessment of the costs to the city of vacant/abandoned

properties.
Factors used to identify costs include the number of police calls for service, number of fires resulting in
property damage, cost to demolish, cost to clean vacant lots, loss of property value, code inspection costs,
increased need for social services, lost tax revenue, unpaid utility bills, and the cost of filing lawsuits.

Create the position of Vacant Properties Coordinator: Don’t just add more responsibilities to

Ms. Shakoor-Grantham, who is already overwhelmed. In San Diego, a Vacant Properties Coordinator
helps ensure that a jurisdiction’s resources are appropriately and effectively marshaled without waste
or overlap. The Vacant Properties Coordinator should serve within the Code Enforcement Division.

Responsibilities of a coordinator can include:

  • maintaining a database to track the location of vacant properties as well as complaints and

responses;

  • administering the abatement ordinance to clean and secure vacant properties;
  • coordinating responses and communication among relevant government and private agencies;
  • communicating regularly with community groups; and
  • serving as a liaison to task forces tackling problems — such as mortgage fraud and foreclosure —

related to vacant/abandoned properties.

Establish cleanup crews: The problem of dangerous, vacant buildings is so large that Baltimore created

dedicated teams to clean and secure vacant properties. Cleaning up vacant properties not only helps
prevent crime and improve safety but also generates revenue: Baltimore collected $2.3 million in fiscal
year 2008 from the resulting liens.

Neighbors should be granted legal authority to press trespassing charges against squatters and vandals

at foreclosed properties.

In the alternative, police should be empowered to remove from any property all persons without demonstrable

authority to occupy the premises in the form of a lease or rental agreement that can be produced for the
reporting officers’ review, and verified with all signatories.

No money should be paid to squatters or other illegal tenants. These kinds of payouts have become

part of the problem. This money should instead be paid to whoever keeps the properties secure and clean.

Conclusions

Something is seriously wrong with a system that rewards criminals and punishes people who are trying to pay
their mortgages.

The banks are actually helping to drive down the price of homes by neglecting their foreclosures.

It is time to demand change for our city and the way banks have done business in our town.

Maybe it is time to “Occupy Vallejo.”

For more on the way states, cities and communities are dealing with the foreclosure crisis,
check out these links:

California Foreclosure Home Clean-up Laws:
http://www.ehow.com/list_6980932_california-home-clean-up-laws.html

US Department of Justice/Bureau of Justice Assistance article, “Addressing Foreclosed and
Abandoned Properties” http://www.ojp.usdoj.gov/BJA/pdf/CCI_Abandoned_Property.pdf

US Department of Justice/Bureau of Justice Assistance article, “A Full response to a Vacant
House” http://www.ojp.usdoj.gov/BJA/pdf/CCI_Foreclosure_Crisis.pdf

A legal review of SB 1137:
http://www.msrlegal.com/mediafiles/the-perata-foreclosure-bill-sb-1137-new-rights-for-defaulting-
borrowers-and-tenants-new-complications-for-foreclosing-lenders.pdf

A review of potential challenges to a foreclosure registration program instituted in Los Angeles:
http://cobertlaw.wordpress.com/2010/07/14/los-angeles-new-ordinance-about-properties-in-
foreclosure-or-which-contain-vacant-structures/

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