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Problem: Banks Skipping Out on Foreclosures

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Problem: Banks Skipping Out on Foreclosures

Old 03-30-2009, 10:54 PM
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Default Problem: Banks Skipping Out on Foreclosures

The next big real estate problem is manifesting -- banks are NOT taking back foreclosed property. Instead, the property is going into ruin and the homeowner can be held liable for the city's cost to tear down the derelict home.

It costs the bank more to take the property back and pay the taxes on it than what the property is worth.




Mercy James thought she had lost her rental property ... to foreclosure. ...

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. ...

... 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.
...

In Buffalo, where officials said the problem had reached “epidemic” proportions in recent months, the city sued 37 banks last year, claiming they were responsible for the deterioration of at least 57 abandoned homes; the city chose a sampling of houses to include in the lawsuit, even though the banks had walked away from many more foreclosures. So far, five banks have settled.


http://www.nytimes.com/2009/03/30/us/30walkaway.html
Old 03-31-2009, 04:09 AM
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I guess she couldn't find a match;?
Old 03-31-2009, 05:26 AM
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We'll probably see more of that here too. NH law requires that the property manager/agency be located within 25 miles of the property. Some out of state banks that have foreclosed are surprised by our little peculiarities including eviction must be for a cause, not just because...
Old 03-31-2009, 06:14 AM
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Originally Posted by Kamper View Post
Some out of state banks that have foreclosed are surprised by our little peculiarities including eviction must be for a cause, not just because...
Isn't not paying a reasonable "cause"?
Old 03-31-2009, 06:23 AM
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"banks are NOT taking back foreclosed property"???????

Please explain, I always thought foreclosure = claiming ownership, taking property away from the mortgagee, whatever. I don't know how else to put it, I just don't understand how a bank can foreclose and NOT take ownership?
Old 03-31-2009, 06:39 AM
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Said another way, why would they foreclose and not take posession, or are they playing a game where they are sticking it to the homeowner to pay for the demolition and then will claim the value of the land?

I am no expert in this area, but logically it is hard to see how a homeowner could retain any liability for future costs if the home had been repossessed.
Old 03-31-2009, 06:53 AM
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The banks are not following the foreclosure to the end. Not sure how anyone can say that someone who didn't pay their mortgage and then the bank not taking the property back, is some how the banks fault, and the banks 'sticking it to the homeowner'.

The banks got banged first, when you sign papers and borrow money, you are expected to pay it back.
Old 03-31-2009, 07:29 AM
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Originally Posted by ESSRTEE8 View Post
The banks are not following the foreclosure to the end. Not sure how anyone can say that someone who didn't pay their mortgage and then the bank not taking the property back, is some how the banks fault, and the banks 'sticking it to the homeowner'.

The banks got banged first, when you sign papers and borrow money, you are expected to pay it back.
What I meant by that phrase is that the banks were playing a game with the timing of their legal actions so as to leave the homeowner on the hook for any charges from the city, because they made a determination that the value of the land was worth more than the value of the House+land-necessary demolition costs and taxes.

If the property is foreclosed, then the homeowner shouldn't lose any more than their equity in the property, which of course in many cases is already negative on a current basis.
Old 03-31-2009, 07:45 AM
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Maybe my morning coffee was a little weak today, but I still don't get it - how does the bank foreclose WITHOUT taking legal possession? Doesn't possesion (transfer of tiltle/deed) need to take place before the mortgagee is evicted? How can a bank evict someone without asserting their claim to ownership?

Maybe a bank's not "sticking it to a homeowner" who fails to pay their mortgage, but throwing someone out of their home and then asking them to repair any damage that occurs while the place is vacant (because the place is vacant) sure sounds like kicking someone while they're down.
Old 03-31-2009, 07:52 AM
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Sounds like the author of the story didn't get the facts straight. Maybe foreclosure was threatened but never followed thru.

You do not foreclose until the deed goes to auction (foreclosure auction). Then you have to vacate the property. You do not have to leave until the title passes to new owners.
Old 03-31-2009, 07:55 AM
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The banks are not finishing the foreclosure process, that is what they are saying. NOT foreclosing.
Old 03-31-2009, 10:42 AM
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Either the lender forecloses or not that is the law in SC. When the Master in Equity has his hearing an order is drawn and title is passed to the lender. There is no half way process.
Old 03-31-2009, 10:44 AM
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Originally Posted by DrJim View Post
... not paying ...
Failure to pay rent? Yes.

Wanting to empty the building so you don't have to hire an agent - no.

You've deliberatly let the building become decrepit to the point it's no longer legally habitable - yes. Of course that's not how the notice would be phrased.
Old 03-31-2009, 11:24 AM
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If I get booted out of my house for not making payments, i don't see how i can possibly responsible to come back and cut the grass.
Old 03-31-2009, 11:35 AM
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Originally Posted by Joe View Post

If I get booted out of my house for not making payments, i don't see how i can possibly responsible to come back and cut the grass.

If the county record shows YOU are the homeowner, the city can hold you responsible to not allow the property to become derelict.

I have no idea how this works. I guess if I got booted I'd send a letter to the county recorder indicating a need to update their records removing me as the homeowner?!? ;?
Old 03-31-2009, 11:49 AM
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Originally Posted by Eyeball View Post
If the county record shows YOU are the homeowner, the city can hold you responsible to not allow the property to become derelict.

I have no idea how this works. I guess if I got booted I'd send a letter to the county recorder indicating a need to update their records removing me as the homeowner?!? ;?
That's what I was thinking, too. It sounds like the recording process showing the transfer of ownership wasn't executed or wasn't executed properly. If I'm not mistaken, the Mortgagee is supposed to be legally served the papers for repossession, eviction, etc.
so it seems to me that it should be pretty provable that the bank took possession. I have to go with the above theory that the reporter probably doesn't have all the facts straight.Maybe the lady vacated and stopped paying but the legal foreclosure channels hadn't yet taken place.

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