More banks walking away from homes, adding to housing crisis

[The Straight Story]

More banks walking away from homes, adding to housing crisis
Research shows 1,896 red flag homes in Chicago appear to have been abandoned during foreclosure process

A new type of property is adding to neighborhood blight: the bank walkaway.

Research to be released Thursday, the first of its kind locally, identifies 1,896 "red flag" homes in Chicago — most of them are in distressed African-American neighborhoods — that appear to have been abandoned by mortgage servicers during the foreclosure process, the Woodstock Institute found.

Abandoned foreclosures are increasing as mortgage investors determine that, at sale, they can't recoup the costs of foreclosing, securing, maintaining and marketing a home, and they sometimes aren't completing foreclosure actions. The property, by then usually vacant, becomes another eyesore in limbo along blocks where faded signs still announce block clubs.

"The steward relationship between the servicer and the property is broken, particularly in these hard-hit communities," said Geoff Smith, senior vice president of Woodstock, a Chicago-based research and advocacy group. "The role of the servicer is to be the person in charge of that property's disposition. You're seeing situations where servicers are not living up to that standard."

http://www.chicagotribune.com/classified/realestate/foreclosure/ct-biz-0113-walkaway--20110113,0,7716930.story

[onethatcares]

1. does squatting become a right then?

at what point do the homeless have the right to take an abandoned house and turn it into a home?

I think the cities should do the correct thing and fine the hell outa the banks that try this. Code Enforcement is your friend according to the powers that be here in sunny floriduh.

[elifino]

2. My question is who is responsible for the property taxes?

[Shagbark Hickory]

14. I guess when they don't pay the taxes, they in essence abandon the home because then

it can be seized by the local municipality.

[DCKit]

22. The banks obviously have money, and they should be sued for the blight they created. nt

[xor]

3. So people were kicked out of their homes just so the banks could abandon them..

There must be a better way than this.

[Martin Eden]

7. That was my thought too

When I was a kid growing up in the 60's I thought that by the 21st century (seemed very far into the future) we would have made strides towards a more enlightened and just civilization -- but if anything we are taking steps backwards.

Yes, there has got to be a better relationship between the financial world and housing.

[RKP5637]

11. Yep, same here. I envisioned a far far different world today - it seemed in the

60's there was much hope for a more enlightened and fair populace in the 21st century, now I feel we are just going backward in many ways, each day, in many areas.

[conspirator]

9. That's capitalism. Is not enough to be rich. Other's must be poor and lick your boots n/t

[RKP5637]

13. It is, isn't it - one feels more wealthy by watching others suffer. It is in

many ways the ultimate in bullying. Many must lose so some can win, and then the winners will make the losers suffer as best they can so they can bask in their aggrandizement of their exploits of wealth and worshiping of greed. Runaway capitalism is far from a healthy society.

[Quantess]

25. Yes.

Great quote!

[Cass]

4. Gee, maybe the banks should agree to more loan modifications then.

Something like only 12% of loan modification requests are approved. Why not work with homeowners who need some help? Maybe not at all those getting a modification would be able to hold on to their homes in the long run, but many would so why not give people a chance??

But no, the banks would rather throw people out instead of working with them, abandon the house, screw the city/county out of property taxes and let the house become a blight on the neighborhood. And, to add insult to injury, these banks got bailout money by the truckload.

Bastards.

[RKP5637]

16. Yep, the banksters do not give a F about this country or the people. Many banks

are bigger than countries. Their only interest is money and greed, and our gov. has helped that out quite well. Many citizens are moving into serfdom and they don't even get what's going on ... so sad.

[xchrom]

5. if it's 1896 in chicago -- imagine what's out there all over. nt

[RKP5637]

18. A lot of it's hidden out of sight, out of mind. That's the plan, and one sure

won't hear the MSM reporting on it much. MSM wants us to believe we live in la la land, everything is just peachy and we're all OK. Good investigative reporting is squeezed out by MSM.

[bluerum]

6. The 'servicer' is in it to make money. Period. End of sentence. Once the

possibility of making money no longer exists they write it off.

But they gouge the rest of their customers to make up for it. They get tax breaks and free fed money too. Must be nice to not be accountable for anything.


On edit : go with a local credit union. Drive out the big banks.

[ProgressiveProfessor]

8. What steward relationship?

I believe the author presumes something that is not there. The lenders have no responsibility to the city or neighborhood legally.

There are a couple of interesting things here thought:

- Abandoned prior to foreclosure means the last owners are still on the books. It also means they were never forced out. If the house is empty...what happened?

- As others have said, code enforcement is your friend. Citations need to issued for lender owned homes that are not maintained, especially when it involves safety and sanitation.

- If the property is truly abandoned by the bank, the city can seize it and sell it for taxes. Takes about a year, but it is a way to have much lower cost houses available. It requires the city to be aggressive and care about getting it done.

[Bigmack]

10. It also requires that the city have enough...

staff left to complete the tax sale.

Cities are laying off like crazy.

[ProgressiveProfessor]

23. They could outsource it.

The advantage to the city is the return of the property to the tax rolls, a long term benefit. The effort is to get any creditors to be forced or voluntarily relinquish its claim on the property and get some payment on the back taxes and fines. Use that to pay the company working on it.

[girl gone mad]

27. Article lays it out.

"For its report, Woodstock culled data from the city's vacant properties registry, as well as buildings identified to the city as vacant by municipal departments, foreclosure court filings made from 2006 to the first half of 2010, foreclosure auctions and property transfers. Some of the 1,896 properties flagged by Woodstock as likely walkaways could, in fact, still work toward a resolution in the foreclosure process, but 40 percent of those homes had been in the foreclosure process for more than 18 months.

Woodstock believes its projections are conservative because lenders also decide to write off their investments in properties before filing initial foreclosure actions. For only those 1,896 homes, Woodstock pegs the cost to the city, if it needed to seize, secure and demolish them, at $36 million.


People lose jobs and have to relocate. Don't want to stay in a neighborhood that's becoming blighted. Can't afford the bills. etc.

Banks are taking their sweet time in foreclosing, mostly to maintain the appearance of solvency.

If the properties had value, the banks would eventually take possession. The city won't be able to sell them, they must be destroyed.

[firehorse]

12. Reminds me of how Harlem used to be, blocks of abandoned buildings and crack dens

Maybe artists and squatters will move in, turn gardens into the abandoned lots.

[slackmaster]

15. Did the city eventually take over those properties, firehose?

Pleas share what you can remember.

TIA

[firehorse]

24. I know more about specific buildings in the lower east side

Downtown, some of the buildings sat empty and squatters took them over. Some were drug dens, some more like artists squats. By the late 80's some of those buildings successfully turned into homesteading buildings and low income co-ops like HDFC's, where the tenants form a long term agreement with the city. Some buildings had to be demolished and community gardens were put in the lots. Sometimes the city took possession of the property and eventually a developer would buy it.

[peacetalksforall]

17. Aren't our banks the greatest of Americans? What patriotism. To be commended for thinking

about their country. With all due sarcasm.

[RKP5637]

19. And they are too big to fail, we must worship at their feet. Praise be to

the banksters almighty!

[WillyT]

20. K & R !!!

:kick:

[leftstreet]

21. K&R

[delightfulstar]

26. This is bad all around...

Fewer properties on the tax rolls means less revenue for the city, and could translate into even more city job cuts, loss of services, etc., not to mention crime and blight. The city needs to get a handle on this, or they will have a Detroit-type problem on their hands. Chicago is my hometown, and I'd hate to see it go downhill that way.