Banks are holding foreclosed homes off the market, according to researchers who've examined foreclosure and MLS records. It is estimated that over 800,000 homes have been foreclosed upon but not placed on the market, while there are probably an equal number of homes in default which should be foreclosed upon, but banks are thus far avoiding doing so.
It appears that banks have decided that acknowledging that they loaned $800K for an $80K home on the edge of a ghetto would be embarrassing, so they just never put that home on the market. So it sits vacant, eventually squatters burn it down, and hey, then they can collect insurance!
Well, it's a theory, anyhow....
-- Badtux the Puzzled Penguin
Stranger still, some people report that after getting eviction notices and moving out, that the banks never took the home back. Months later, the owners recieve bills and/or fines for the empty house from the city.
ReplyDeleteMy theory would be that they don't want to put them on the market because they don't want to sell to the bargain hunters. They would rather wait until they find themselves a couple of suckers looking for their first home.
ReplyDeleteThen again, maybe I'm being too cynical.
Terrant
ReplyDeleteHow can you be too cynical when it comes to banks?
not really related, but...
ReplyDeleteScrappy Mortgage Blogger Fights Bad Court Ruling
A reader points us to this Citizen Media Law Project report on an unlikely new front in the battle for press freedom and an unlikely freedom fighter.
It's not just houses that banks are refusing to reposess. There are entire malls and other commercial property that banks don't want to take back. It's part of the "zombie" phenomenon. Zombie banks don't want zombie houses or shopping malls, because that makes their balance sheet look dead. California has proposed paying tax refunds with IOUs, (yes, I know that's on hold) which would make it a zombie state. People are being told to work four days a week, or furloughed without being fired, which makes them zombie employees.
ReplyDeleteAmerica -- land of the free, home of the living dead.