Despite the nascent recovery in the U.S. housing market, thousands of homes still sit vacant in highly distressed markets. But according to CNBC, despite their appearance, not all of these homes are foreclosures. Many are still owned by borrowers — whether they know it or not.
Early last year, the nation’s five largest mortgage servicers signed a settlement over “robo-signing” foreclosure abuses. The deal resulted in thousands of properties being released from their liens, with many more to come.
Additionally, some banks are deciding that in some judicial foreclosure states—like New York—it’s more lucrative to walk away from distressed homes.
“What we’re finding in those neighborhoods is in judicial states [where a foreclosure case has to go before a judge], banks are making a decision that it’s going to take two years to complete this foreclosure, and increasingly cities are enforcing things on codes and vacant buildings,” Ed Jacob, executive director of Neighborhood Housing Services of Chicago, told CNBC. “Banks are looking at what the residual values will be and then the costs they will incur and essentially saying it’s not worth it for us to go through the entire foreclosure process.”
While this may seem like welcome news for borrowers, those who walked before the bank mailed the notice of its plans to abandon the property may have no idea that they still own their homes — or that they are liable for upkeep and property taxes.
“Does the bank rep think people are sophisticated enough to know the difference? They get a notice from a bank … this is complicated stuff,” Jacob said. “They don’t know if the sheriff will be out in 30 days. In some cases they probably stopped opening the letters from the bank. Some homeowners have fatigue.”
In the latest development in the housing crisis, banks are now sometimes choosing not to take possession of properties at the end of the foreclosure process because the cost of possession is higher than the value of the property. Properties are instead being returned to their owners, who face additional maintenance costs because the properties have been vacant for months. Bank walkaways are most quantifiable in states where foreclosures are processed through the court system, experts said. But the courts process foreclosures in only about half of the states, so it’s hard to count bank walkaways. Kermit Lind, a professor at Cleveland-Marshall College of Law and a foreclosure law expert, said bank walkaways could be “the next wave of the crisis.”... more
The best thing to do is call your favorite Realtor to take a tour and find out more about the property and it's market value. Of course, I would be happy to help you with that process. Give me a call when you can and I can also fill you in on the government websites you can look at to see foreclosures. On those sites you will need a Realtor to put in a bid for you if you like a property. Best of luck!
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