March 30, 2009
Banks Starting to Walk Away on Foreclosures
By SUSAN SAULNY
SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.
Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.
So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.
“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.
. . . Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter, said some properties had become such liabilities for investors that it was not even worth holding on to them to strip valuable fixtures, like kitchen appliances, toilets and hardware.
“The whole purpose of foreclosure is to take title of the property, sell it and recoup what money you can,” Mr. Cecala said. “It’s just a sign of the times that things are so bad no one wants to take possession of the property.
I recognize that Marcy James should probably not have been given a mortgage. Ms. James, a home health care administrator, is not some bum off the streets. She made her payments until the fine print jumped into boldface, then rented the house to make the payments. A bank that wouldn’t adjust her mortgage, foreclosed, allowing the house to be essentially wrecked and then said, “Oops, didn’t mean it, take over what is now a wreck and keep paying.”
“In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it.”
In a riptide of foreclosures, banks throw out owners who mow the lawns and keep the property maintained, just to sell on the courthouse steps for 40 cents on the dollar. Would they sell to the owner for 40 cents? Not on your life.
The wreckage of homes is but a microcosm of the wreckage of America, thanks to slicers and dicers who deal in liar loans and extort the taxpayer to take up the slack. Let ’em hang, Mr. President. Don’t send them any of my money.
Let ’em lose every single dime and, when the wreckage of the predator banking industry is sold on the courthouse steps, maybe we can start a new and honest game. Probably with a whole lot less than the $trillions these thieves demand.