Next Wave in Mortgage Crisis: Abandoned Foreclosures
In many troubled housing markets, some mortgage holders are walking away from foreclosures, calculating that the costs exceed the value of the real estate.
These bank walkaways often mean more financial problems for homeowners, who are now responsible for maintaining properties that had been abandoned and then vandalized, the New York Times reports.
Walkaways are occurring in cities that include South Bend, Ind.; Buffalo, N.Y.; Kansas City, Mo., and Jacksonville, Fla., the story says. Law professor Kermit Lind of Cleveland-Marshall law school says more are in the offing. “It is what some of us think is the next wave of the crisis,” he told the Times.
The Times featured the plight of South Bend homeowner Mercy James, who forced her tenants to move out as foreclosure loomed. After looters and vandals damaged the property, the sheriff’s sale was canceled. The company that was most recently servicing her loan is out of business, and the original bank that gave her the mortgage said it could not find a record of it.
Now South Bend plans to demolish the property and bill James for the service. James’ lawyer, Judy Fox of the Notre Dame Legal Aid Clinic, says she has seen similar cases.
“Nobody has any idea who owns what or who’s responsible,” Fox told the Times. “It’s a very common story.”
