Even the banks are walking away from some homes
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
Banks walking away from foreclosures is the topic of a New York Times story out of South Bend, Ind.:
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal -- from legal fees to maintenance -- exceeds the diminishing value of the real estate. The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.
Two things struck me here. First, I found it striking that some homes and the land they sit on don’t hold enough value to even cover carrying costs. Second, the bundling and reselling of mortgages that caused so much trouble with the subprime collapse is still causing problems.
In the example given in the story, the company servicing the loan on the house is out of business, as is the parent company, and the original bank can find no record of it.
“It is what some of us think is the next wave of the crisis,†said Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law.
Another layer of wrinkle, the home was trashed and the city will charge the homeowner to pay for demolition. Amazing. I’m not hoping not to see this development anytime soon in Southern California.
-- Lauren Beale
Thoughts? Comments?
