Preferred groups first to come to the trough of foreclosed properties
Senate Bill 1079 aims to level the playing field for non-corporate buyers when foreclosed homes head to the auction block. It’s part of the larger war on “greed-fueled” landlords.
Does anyone remember the financial crisis of 2007-2008? California lawmakers have not forgotten.
Back then, Wall Street landlords gobbled up tens of thousands of foreclosed homes, but Senate Bill 1079 looks to avoid a repeat of history. The legislation was enacted to keep properties in the hands of the community and prevent well-heeled speculators from going on another buying binge. Families, renters, local governments, housing nonprofits, and community land trusts will now be able to compete with Goliath landlords.
Instead of multiple homes being bundled together at auction, foreclosed homes will not be sold individually. Let’s say a buyer makes a bid at a foreclosure auction. There is a 45-day “cooling off” period because certain groups now have time to make a higher bid. The bill was sold as good public policy that retains the community’s character, avoids a vast inventory of vacant properties and the attendant blight, and picks favorites with individuals and groups dedicated to preserving affordable housing. Basically, lawmakers told giant landlords: Foreclosed homes are not yours to gobble up.
Both tenants' and landlords’ advocates have applauded the bill. We think it is a good opportunity for savvy investors with a bit of money to come and play in foreclosure auctions that were once dominated by an exclusive club of investors with deep pockets.
Not a panacea
Times are different from the Great Recession of yesteryears. For one, homeowners have equity, and the standard tools to provide relief then may not be of any value today. Rather, homeowners who are unable to make their mortgage payments are likely to put their home up as a traditional sale.
A big question mark remains in whether 45 days is enough time for stakeholders to come up with the necessary funds to beat the highest bids. Funding is scarce nowadays.
MT Evictions is all about finding hidden gems and helping you work smarter in your real estate business. With the larger war on corporate landlords, SB 1079 may be a good opportunity for investors to buy rental properties on the cheap.
About the author
As the team leader of MT Evictions, Paulina Martignon is the landlord's ally in transitioning tenants out of rental units. She is renowned for her educational events on landlord-tenant laws and rules and can assist with a variety of other time-saving tasks to help rental housing providers maximize their return on investment.
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If you have problematic tenants or other challenges in your landlording business, Paulina and her team can assist.