Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development… (Alejandro Lazo / Los Angeles…)
Passing a Homeowner Bill of Rights for California borrowers is a crucial step toward preventing future foreclosure abuses, federal housing chief Shaun Donovan said as he toured South Los Angeles neighborhoods ravaged by the housing bust.
California is expected to receive the largest chunk of a historic $25-billion mortgage settlement reached this year with the nation’s five biggest banks. But Donovan said that in order to make reforms reached in that agreement permanent, state legislators must pass a series of bills backed by California Atty. Gen. Kamala D. Harris, who negotiated on behalf of the Golden State.
“We cannot let homeowners suffer in the way that we found in our investigations,” Donovan said Tuesday, speaking at the FAME Assistance Corp., an economic development agency in South Los Angeles. “Because foreclosures and other processes around homeownership are directed by state law, it is critical that a Homeowner Bill of Rights move forward.”
The series of bills backed by Harris would restrict practices such as foreclosing on homeowners as they try to negotiate a loan modification and mandate that banks designate a single person to work with troubled borrowers. Opposing the bills are mortgage bankers and the general business community, The Times has reported. Similar efforts in the past have failed.
Earlier in the day, Donovan, secretary of the U.S. Department of Housing and Urban Development, toured the Broadway-Manchester neighborhood of South Los Angeles with Rep. Maxine Waters (D-Los Angeles), including a stop at a home that had been revitalized by the city using federal money.
With a new roof, exterior and freshly painted purple doors, the two-bedroom, one-bathroom dwelling was once in severe disrepair after being foreclosed on. Property records show it was purchased last year for $160,000 by Restore Neighborhoods LA Inc., a nonprofit created by the city’s housing agency to use federal funds for purchasing, rehabilitating, marketing and selling foreclosed homes in hard-hit areas.
The home also had recycled bamboo floors, double-pane windows and a number of energy-saving features. It will go on the market next week for about $185,000. Taxpayers will not be recouping their full investment, as rehabilitation efforts took the total cost of the project to $302,00, said John Perfitt, executive director of Restore Neighborhoods LA.
The home will be marketed to low- and moderate-income families who qualify. While touring the home, Donovan told Waters that in areas targeted by the federal program the number of vacant homes is declining and, in a majority of neighborhoods, home prices are rebounding.
“It’s not just the jobs,” he said. “It really has begun to turn the market around.”
Housing data shows that the turnaround has not quite come for the 90003 ZIP Code, where the home is. As of March, values had fallen about 27% from a year earlier. A total of 19 homes sold in March with a median price of $125 per square foot, according to real estate research firm DataQuick of San Diego.
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