| City Council One Step Closer To Nuking Your Home Equity |
By Walter Moore, Candidate for Mayor of Los Angeles, WalterMooreForMayor.com
December 10, 2008
If you thought your home equity could plummet no further, just wait till the City Council passes the foreclosure ordinance it requested and, today, received, from the City Attorney.
Regular readers will recall I warned you about this on November 23, 2008.
The gist of the proposal is that if a lender forecloses on a residential property, and that property is rented out, the lender will NOT be able to evict the tenants. Instead, the lender will be stuck with the tenants, at whatever rent is specified in the lease, as if it were a rent-controlled apartment building.
That means, for example, that if you and I decided to rent our homes to one another for $1 per year for 10 years, and then we stopped paying our mortgages, the banks would be stuck with us as tenants, and stuck with the $1 per year rent.
Well, what do you think a law like that would do to the housing market in our city?
If this laws passes and you were a lender, would you lend, say, $500,000 to someone to buy a house in this city? Of course not. The risk that you'd get stuck with a tenant for life at below-market rates would be too great a risk to take. And if lenders won't lend, buyers can't buy. Result: your home's value, and your equity will sink even lower -- and stay there.
So if you own a home in L.A., or hope to own one some day, or if you are a Realtor or banker, you might want to urge your City Council Member to vote "no" on this proposal, and urge your (current) Mayor to veto it. (You can refer them to Council File 07-2438-S9, "Amending The Los Angeles Municipal Code To Restrict Evictions Of Tenants In All Foreclosed Rental Properties To Be Subject To The City's Rent Stabilization Ordinance.")
In the meantime, I can tell you -- based on my real estate broker super powers -- that one sure-fire way to increase your home's curb appeal and market value is to put a free "Walter Moore for Mayor" yard sign out front. The people who speed through your neighborhood can't read about me in the local papers, but they can read about me on your yard sign.
Remember: in this campaign, yard signs and bumper stickers aren't just a show of loyalty; they are instead an important means for us to let people know they have a really good alternative to Villaraigosa. Click here to get a yard sign.