Punishing Foreclosure Victims--Some Banks Take One Last Shot

By
Real Estate Services with TheHousingGuru.com

In an article today in the Milwaukee Journal Sentinel, it was reported that it’s becoming commonplace for lenders to refuse to take title to some properties following foreclosure. Why would a bank bother to foreclose and then abandon the property? It’s simple economics. Many of the homes just aren’t worth the bank’s efforts. But then, why would they foreclose? And who ultimately owns such properties? The answers are often as confusing an illogical as the creation of the subprime collapse that precipitated the problem.

 

What’s happening is a crime—perhaps not legally, but figuratively. Sometimes it’s a crime against the very people who have already suffered the most; and other times it’s a crime against neighborhoods trying to recover from issues of high crime and drug dealing. In the words of Catherine Doyle, attorney with the Milwaukee Legal Aid Society, “This is just the meanest and nastiest thing (lenders) could do. Even more profound is the terrible damage to the community.”

 

Abandoned homes become a blight on neighborhoods, havens for drug and criminal activity, and create fire and safety hazards. No longer sources of tax revenue, such homes are a drain on struggling cities resources, and ultimately cost taxpayers thousands more when condemned and bulldozed.

 

The procedure, known in the trade as “walkaways,” is a growing problem, especially for cities, where most are pressed for revenue. The mortgages on these homes, the great majority of which are subprime, were often made by now-defunct mortgage brokers, and are being foreclosed upon by loan servicers on behalf of investor groups often thousands of miles away. And, unfortunately, there appears to be no solution to the problem.

 

Have banks lost their hearts, or is it they never had one? The image of the friendly neighborhood banker was perhaps always a utopian vision; but what they’re doing is egregious on a monumental scale. Throwing people out of their homes, only to have those homes bulldozed later, is not only inhumane, it’s sheer stupidity. Once the owner is forced out, the home falls in to disrepair, may be vandalized, and everyone loses. And, the irony is; when the bank walks away, the original owner is still on the hook for taxes, boarding-up and clean-up fees that can run into the thousands of dollars. It’s a game of no winners.

 

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Re-Bloggged 9 times:

Re-Blogged By Re-Blogged At
  1. Frank D'Angelo 07/13/2009 09:20 PM
  2. Jen Anderson 07/13/2009 10:52 PM
  3. Kimberly Koehler 07/14/2009 01:24 AM
  4. Vicky Henry 07/14/2009 08:32 AM
  5. Matt Yogerst 07/14/2009 09:01 AM
  6. Yogesh Karki 07/14/2009 09:19 AM
  7. Penelope Zeller 07/14/2009 11:04 AM
  8. Amanda Wernick 07/14/2009 11:35 AM
  9. Vick Pacheco / Luxury Homes & Lifestyles 05/31/2010 03:33 PM
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Topic:
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Tags:
foreclosure
demolishing foreclosures
banks punish foreclosure victims
housing crisis

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Anonymous
Sybil Campbell

I totally agree with you about this problem.  If this situation is not addressed soon, crime rates will definitely go up in areas where houses are abandoned.

July 21, 2009 11:00 PM
Anonymous
Rob Jenson

the only way to fix it is for the bank to quit asking for all this paperwork from sellers on short sales and start approving short sales in a matter of days.  Who cares if they "qualify" for a short sale.  The fact is they are not paying their mortgage and you will get the house back anyways.  If the bank is worrying about the "unqualified" slipping through the cracks, well, they already are.

July 24, 2009 01:22 AM
Anonymous
Anonymous

Banks are unfeeling, unemotional corporations - doing whatever is best for their bottom line.  That's it.

July 27, 2009 02:40 PM
Rainer
263,906
Vick Pacheco / Luxury Homes & Lifestyles
REALTOR, VickTheRealtor@gmail.com
Charles Rutenberg Realty / Luxury Homes & Lifestyles

I have never heard of Bank walking away, but you have to wonder, there is one house in our neighborhood, it foreclosed two years ago and the delinquent owners still live in the house. 2 YEARS! That is insanity.

May 31, 2010 03:32 PM
Rainer
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Violetta Polyakov
Broker/Owner
Florida Home Consulting - Мы Говорим По Русски

The dumps they are bulldozing are located in crime ridden neighborhoods where houses are used to sell drugs, have meth labs in them, and so on.  Few time REOs that I received from the bank would appraise for $6,000 - $8,000 and it would cost bank more to sell them then to demolish.  The demolition is going on in Cleveland, Chicago, Detroit, in really really bad parts of town, so it is a good thing for the community to get rid of this garbage and go through government stabilization program to get the community up and running again.  It sounds heartless, but makes a lot of sense if you think about it.

August 22, 2011 10:32 PM
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John Mulkey

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