Faces Of Foreclosure

October 31, 2009: 18.8 Million Vacant Homes in Last Quarter.

We need to dig to get the full story, but there are early indications that some lenders are “donating” money to communities where houses sit after foreclosure so that a new wave of low-income families can purchase them. Many of these homes are the very same houses they threw into foreclosure rather than help the existing homeowners in the first place.

Do you feel crazy yet? No. Well keep reading . . .

Abandoned and vacant foreclosed homes are piling up around the country . . . Repairing the damage from foreclosures is a difficult challenge, because cities, states, community development groups, and even willing banks and servicers have no experience working together on the complicated process of disposing of or reclaiming unwanted properties, said Joseph Schilling, a Virginia Tech urban affairs professor and co-founder of the National Vacant Properties Campaign . . . “We do a pretty good job in this country of recycling cans and plastic bottles,” Schilling said. “But we do an awful job of recycling and reusing vacant properties.”

In some states, even the banks are walking away from homes they threw into foreclosure.

A particular lender — one with a dreadful track record insofar as loan modifications are concerned — is reportedly putting $1 million into Marin County California to help people buy homes, some of which will be the very homes they seized through foreclosure in the past year or two. This is the very same lender that 20-25% of us working with Marin Family Action’s Home Save group have been asking for modifications.

Banks will end up making less from the new loan at the current property value than they would if they modified with the original owners. But they have insurance, don’t they . . . and taxpayers dollars.

What is the guarantee that the new homeowner will be able to keep their jobs and afford the payments down the road? None. Nada.

The San Francisco Chronicle reported on a “shadow inventory” of foreclosed houses—possibly 600,000 nationwide—that have not been placed on the market: “Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.”

Does this strike anyone else as insane? Or quite brutal?

This kind of “business” is what has made me feel quite stupid through the years; I keep thinking I’m missing something. There’s something I don’t understand. Obviously. Someone has a few screws lose and I no longer think it is me.