A disturbing development in the on-going economic crisis is banks whose borrowers have been foreclosed are finding the unrelenting deflationary conditions equally daunting. Banks faced with weak real estate markets, and the high cost of foreclosure, reconditioning and resale are also taking the easy way out. The Cleveland Plain Dealer reports that in Ohio an increasing number of properties are being abandoned by banks without a sheriff's sale after the owner has been foreclosed or voluntarily handed in the keys. Without an owner who cares, homes are being left to deteriorate to become the target of vandals and the haven of drug users. As liens and code citations against the abandoned property mount, the title becomes unmarketable thereby increasing further the costs of turning it around. It could happen that the cost of rectifying the property would exceed its market value. In Cleveland more than 60% of the homes foreclosed by mortgage companies and then sold went for less than $10,000. There were about 14,000 foreclosure filings in 2007 and 2008. But actual sheriff sales--necessary to transfer title to another owner--have dropped from 10,000 to 8,000 in 2008. Often surprised foreclosed owners are informed that they are still on the hook for thousands in back taxes, code violations, court costs and legal fees as well as the unpaid mortgage balance.
Monday, July 20, 2009
Now Banks Walk Away
A disturbing development in the on-going economic crisis is banks whose borrowers have been foreclosed are finding the unrelenting deflationary conditions equally daunting. Banks faced with weak real estate markets, and the high cost of foreclosure, reconditioning and resale are also taking the easy way out. The Cleveland Plain Dealer reports that in Ohio an increasing number of properties are being abandoned by banks without a sheriff's sale after the owner has been foreclosed or voluntarily handed in the keys. Without an owner who cares, homes are being left to deteriorate to become the target of vandals and the haven of drug users. As liens and code citations against the abandoned property mount, the title becomes unmarketable thereby increasing further the costs of turning it around. It could happen that the cost of rectifying the property would exceed its market value. In Cleveland more than 60% of the homes foreclosed by mortgage companies and then sold went for less than $10,000. There were about 14,000 foreclosure filings in 2007 and 2008. But actual sheriff sales--necessary to transfer title to another owner--have dropped from 10,000 to 8,000 in 2008. Often surprised foreclosed owners are informed that they are still on the hook for thousands in back taxes, code violations, court costs and legal fees as well as the unpaid mortgage balance.