A San Diego advocacy group recommended Thursday that local governments fine financial firms that fail to maintain foreclosed properties, and require them to reduce principals on troubled loans.

The report from the Center on Policy Initiatives, titled “Foreclosure: The Cost Communities Pay,” estimates the fiscal impact on the city of San Diego from owners being forced out of their homes at a combined $855 million from 2008-2012.

The CPI, a research and advocacy group for working families, projected 57,000 foreclosures in the city of San Diego during the five-year time period.

A tally from city officials was not immediately available.

According to the study, cities pay for inspections, maintenance of blighted properties and increased public safety calls as a result of foreclosures, which also reduce revenue from unpaid property taxes and the lowered values of nearby homes.

“The foreclosure crisis is clearly devastating to families who lose their homes, but it also has a huge financial impact on neighborhoods and local governments,” said CPI’s Corinne Wilson, who authored the report. “We need to find solutions to recover some of those costs from the banks that cause the problems.” She recommended that governments:

• fine financial institutions that allow bank-owned properties to deteriorate
• recover the cost of maintaining such properties from the companies
• require the firms to accept loan modifications that include lowered principals
• create a registry to target neighborhoods blighted by foreclosures
• strengthen regulation and oversight of the financial industry
• create and protect jobs with good wages

Wilson used data from RealtyTrac, an online database of foreclosed properties, and previous reports on foreclosure costs in other states to prepare the report.

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