Investing in Real Estate:California Repo Homes Are Posing Problems For All Concerned

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California State has seen one of the worst concentrations of foreclosures. The entire landscape is dotted with California repo homes - residential houses that have been taken over or repossessed by the banks or lenders after having failed to sell them at auctions. These California repo houses are posing problems for all concerned - the lender, buyer, neighbours, government and politicians.

The banks have swallowed more California repo homes than they can digest. The result is these are lying vacant and unattended. The innumerable California repossessed homes have become magnets for vandals, thieves, drug peddlers and prostitutes. As such the banks are losing out with the value of the units rapidly falling. Many banks are collapsing being unable to handle the sheer number of California repo homes. Moreover the stagnant pools and overgrown gardens have become breeding grounds for disease.

The evicted lenders are rendered homeless. This puts pressure on rented accommodation and shelters. Camp towns have come up as the people with slim purses have started living off food stamps. Without money there is no buying and the economy is suffering without consumer consumption.

The California repossed homes mushrooming across the state is pushing down the prices of those units not in foreclosure as supply is outstripping demand. With houses not being bought and sold the government is losing out on revenue. A disgruntled population is causing politicians to bestir themselves worried about vote banks.

Reports coming in November 2008 note that in the last session of the legislature in California many bills had been introduced to deal with the problem of California homes. Not all were passed. The Governor vetoed many that did pass through. One managed to become law - Senate Bill 1137 (Perata). It aims to tackle the problems faced by three sections - the defaulting borrowers, the renters of foreclosed units and communities dotted with foreclosures.

As per the law the lenders are expected to take steps to help the defaulting borrowers whose loans started between 1st January 2003 and 31st December 2007. The lender or its representative has to contact the borrower at last 30 days prior to serving NOD or notice of default to work out a solution that will prevent foreclosures. A toll free help number has been set up by HUD. The renter too has to be notified of the foreclosure well in advance.

One of the important terms of the bill is that the new owner of the property, whether the lender or a successful bidder, has to maintain the vacant property otherwise face heavy penalties.

Kevin Simpson, has been studying the foreclosures market, helping buyers on the finer points of California Repo Homes.

real estate investment