Lawmakers agree owners, not government, responsible for foreclosed homes

Members of a legislative subcommittee agreed Monday that the owners of foreclosed homes should be made responsible for maintaining them " not state and local governments.

The issue was raised before a subcommittee studying the housing crisis because, in many cases, empty homes are left to decay after foreclosure because banks, investors and other financial institutions that own them won't pay for upkeep on yards, home exteriors and amenities such as swimming pools.

The result, in many neighborhoods, are dilapidated homes that drag down property values throughout the neighborhood.

"Is it the taxpayers' responsibility to maintain them? I don't think so," said state Sen. Mike Schneider, D-Las Vegas.

Schneider called for legislation to make the owners comply with health and safety laws as well as any planned community requirements.

"I want private business to step up and fix the problem they've created," he said. "I don't want government to step up and bail out banks anymore."

Sen. Warren Hardy, R-Las Vegas, said he thinks there are already laws in place allowing local governments and health districts to order property owners to "clean them up." He said the state needs to compel local governments to enforce those ordinances.

But he agreed with Schneider that the state should clarify that, when a financial institution takes ownership of a foreclosed home, "they are now the owners and have to comply with the rules and assume all responsibilities for the house."

Assemblywoman Marilyn Kirkpatrick, D-Las Vegas, said some local governments may need the Legislature's help to do that since some don't have the ability to impose fines.

The subcommittee chaired by Assemblyman Marcus Allen, D-Las Vegas, voted to draft legislation that would make it clear anyone or any business that takes title to a home after a foreclosure sale to maintain the exterior of the vacant property, including any foliage, cover or drain any swimming pool and prevent trespassers from moving in and further damaging the property and neighborhood values.

The subcommittee also agreed to a laundry list of proposals for the 2009 Legislature to consider, including creation of lease-back programs to allow people who lose a home to continue occupying the house as a tenant and mechanisms to transfer investor owned homes in foreclosure to first time buyers with good loans.

They also voted to put increasing maximum fines for violations by escrow agents and agencies from $500 to $10,000, require mortgage brokers to either post a bond or carry liability insurance and to register out of state mortgage loan servicers on the agenda.

"It's time to crack down," said Hardy.

The proposals will be submitted, along with other housing issues, as proposed legislation in the 2009 Legislature.

Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.