Los Angeles will not follow the fate of bankruptcy homes, based on statements from city officials.
Last week, the administrative officer of the city, Miguel Santana, had to speak before other city officials to reassure them that bankruptcy protection is not among the options being explored to solve the city’s financial problems, in contrast to the statements being made by former Mayor Richard Riordan.
In recent weeks, Riordan has been warning that the city of Los Angeles may have to file for federal bankruptcy protection because of its cash problems. He has been particularly pointing out retirements costs, stating that pensions for city employees should be replaced with self-directed 401(k) plans and that the retirement age should be moved up to 65 from the current age of 50 or 55.
Although the housing crisis is still turning thousands of Los Angeles housing units into foreclosure and bankruptcy homes, city officials are optimistic that the fiscal condition of the city has become better than a year ago.
In the first quarter, the combined number of Los Angeles pre foreclosures and units in the foreclosure house listings of banks reached 59,293, the highest number posted by a metro area during the quarter. Las Vegas, however, posted the highest rate of foreclosure with one filing for every 28 housing units.
The number of pre foreclosures in California also surged in the first quarter to a total of 169,818 properties, with 83,554 units notified of default and 86,264 notified of trustee sale. Although California was fourth in ranking among states based on foreclosure rates, the state again posted the highest number of pre foreclosures and real estate owned properties during the quarter.
Total California filings accounted for 23.2 percent or almost one-fourth of all foreclosure filings nationwide during the first quarter.
To control the city budget, city officials have closed small departments, laid off 100 employees and offered early retirement options to 2,400 city workers with full benefits.
Some city officials have expressed their concerns that talks about Los Angeles going the way of bankruptcy homes could push down the city’s credit rating and could make it more costly for the city to borrow money.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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