The rash of both foreclosures and people just "walking away" from homes has caused a glut of homes that banks find themselves stuck with. While it is easy to look at this from a strictly local perspective the banks find themselves owners of thousands of properties in multiple states and each city has a different sent of rules and regulation . It is a logistical nightmare. That combined with the fact the foreclosure process can take 9-12 months before the bank even has legal possession . More often than not the homeowner walked away leaving the house wide open. Often by the time the bank is in the 'legal' position of "standing", the property has been vacant for 3-4 months.
The city suing these banks will merely delay the process and place obstacles to these properties getting in the hands of new owners. It is interesting to note, the city is not suing Fannie Mae, Freddie Mac or HUD who hold far more properties. Suing government or quasi governmental entities is apparently a political "no no".
What the city should do is create a community land bank and work with the banks and lending agencies to get these properties in the hands of new owners as quickly as possible. It would be possible to utilize CDGB funding for paint up fix up for these properties. What IS important is to stop the "speculator cycle" of investors buying these properties at dirt cheap prices then sitting on them waiting for a market recovery.
I have watched one house that was in foreclosure then sold go through 3 different "investor types" who merely buy it, and re list it, for 5-10K more then they paid waiting for the next "investor" to come down the pike. In the meantime the property declines in value but is "OK" for 3CDC to hold hundreds of properties boarded up for years, even though there are "urban pioneers" willing to come in and restore these homes?
There are people who are interested in actually buying these homes and restoring and living in
them. In fact the city has countless homes on its demo list which could easily be saved. Most of these are historic homes that merely need a new owner with some "vision".
The banks and lending institutions are making NO MONEY on foreclosures. I know this from experience, we bought a foreclosure from Fannie Mae. After they had originally loaned 50K on the property in 2005 spent 5-7 thousand in legal fees getting legal possession, we bought the house for a fraction of what they had in it. After they paid the real estate commissions, and the property management fees out of our purchase price, Fannie Mae got a check for 681.50 at closing! As a buyer we got a "great deal" as a taxpayer I am angry that a quasi governmental agency is "giving" houses away just to get them off the books. Of course we are the rare buyer who actually intends to put money into the house and restore it and live in it, and as a result bring up the neighborhood, but 95 percent however are sold to investors or slumlords. THAT is the real problem.
The city needs to take a more co-operative tone. Lawsuits will accomplish little if anything and it is not a solution to this crisis.
The city's wrong approach on foreclosures
![The city's wrong approach on foreclosures]()
Reviewed by citra
Published :
Rating : 4.5
Published :
Rating : 4.5
