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Banks Booting Families and Leaving Homes to Rot: A Tour of Blighted Homes in Los Angeles

Los Angeles has an ordinance that fines banks for leaving foreclosed homes in disrepair. So why are so many of them blighted, dragging down whole neighborhoods?

Photo Credit: Melissa Chadburn


These enormous economic shifts imprint people at an incredibly deep level. We feel it. When we wake up in the morning. We are going through the pain of this one. We are having our lives changed by this one.  We take with us through our days the big sack of worry for our kids with this one. It’s on our streets. You see it in the overgrown lawns and boarded-up windows of some of those bank-owned homes.

There’s a loss. A deep loss of trust. And it stays even when the DOW is up. Even when the tickers are going and there’s hopeful news on the radio about the housing market. We are suffering a kind of punishment from this recession. From all the terrible lies that came before. This is what remains. Distrust. Fear. Worry.

We know the foreclosure crisis began with the lies. The banks gave home loans to anyone with a pulse, provided they had another sucker institution lined up to buy the loan. How did they make these loans in the first place? By committing every kind of lending fraud imaginable—particularly by entering fake data on home loan applications magically turning minimum wage janitors into creditworthy wage earners.  

And we wanted those loans and we wanted to be worthy. We wanted to have that dream. Some of our families traveled here by way of Route 66, one of the original U.S. highways often referred to as The Mother Road. Our families came in pursuit of abundance and diversity. Even today mobility remains at the heart of the California dream.  It is supposed to take the sting out of the widening gulf between the have-mores and the have-nots.

In 2006, according to report by Credit Suisse, a whopping 49 per cent of the nation’s subprime loans were “liar’s loans,” meaning that lenders could state the incomes of borrowers without requiring any proof of employment.

And this stench of a feeling, this pain, this worry that we drag with us throughout our days— that to me is what obsesses me. That’s what’s eating at me.

In May 2010, the City of Los Angeles passed a Foreclosure Registry Ordinance designed to “protect neighborhoods from becoming blighted.”  The ordinance requires banks to register properties with the city of Los Angeles  that they have foreclosed on or as soon as they begin the foreclosure process by issuing a Notice of Default (NOD).  It imposes tough fines of up to $1000 per day on banks that fail to maintain those properties.

Two years later, bank-induced blight continues to ravage our neighborhoods, yet not even one bank has been fined for violating the ordinance. Because of a major loophole which lets banks register for free with a banking industry-created private service known as the Mortgage Electronic Registration System (MERS), only about 21% of foreclosed and foreclosing properties in Los Angeles have even been registered with the city. MERS does not provide the city lists of the properties registered with it, depriving officials of the information needed to police bank-induced blight.  Examples from other cities demonstrate that stronger enforcement could produce much better results than we have seen in Los Angeles.

Concerned about the level of unchecked blight in our communities, activists from ACCE, Good Jobs LA, and the Service Employees International Union fielded a team of a few dozen community-based “blight busters” in April and early May to find and report neighborhood-scarring blight. During the first three weeks of this community-based effort, activists found at least 460 bank owned properties with conditions that appear to violate the ordinance.

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