'Bank Walkaways' On Foreclosures Leave Owners In Dark

[babylonsister]

Banks Starting to Walk Away on Foreclosures

Sally Ryan for The New York Times

Mercy James’s rental property in South Bend, Ind., was in foreclosure, but a sheriff’s sale was canceled at the last minute.

By SUSAN SAULNY
Published: March 29, 2009


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.

The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.

more...

http://www.nytimes.com/2009/03/30/us/30walkaway.html?ref=business

[CoffeeCat]

1. In every direction...

...this entire situation is a ginormous clusterfuck.

This woman's pain is evident here, and is the biggest tragedy of this article. She's booted out, then vacates
and the property is damaged. Now the bank tells her to resume maintenance on the property, leaving the title
in her name. That's awful--because now she has to pay for the tear down.

What is equally as jarring---is that the banks are refusing to take these houses. What a mess.

Why don't these banks work with homeowners?

Pretty soon--so many American neighborhoods are going to look like a bomb hit them.

[MrPerson]

2. She should sue the bank for not following through

and causing the collateral to be damaged.