Thursday, October 22, 2009


Dayton Daily News - As if the mortgage foreclosure crisis wasn't bad enough, sometime last year a new phenomenon began to emerge: Experts say mortgage lenders and banks began walking away from foreclosed properties, especially in urban areas.

The so-called "walkaways" can occur along several different paths, but the effect is the same - after threatening or getting foreclosure, the lender attempts to abandon the usually vacant property, leaving the original owner, the neighbors and the city to live with the damage.

Owners often accumulate taxes and zoning enforcement fines on property they believe they no longer own.

Neighbors watch their property values decline as the vacant property deteriorates and is often broken into and stripped.

Cities then have to bear the cost of boarding up a structure, maintaining the lawn and, eventually, demolishing it.

Dayton housing inspector John Carter did a study last year of 302 vacant and abandoned residences in the city and found that about 70 percent were bank walkaways. Of those walkaways, he said, about 20 percent had mortgages but no foreclosure was ever filed.

"There are several tragedies to it," said Richard Stock, director of the University of Dayton's Business Research Group. "The very first tragedy is, my God, these people could have continued to be in their house all this time, maintaining it. And then there's the impact on the community." . . .

Dayton Daily News - Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they can't be identified in searches of public real estate and court data without individually pulling case files, experts say. . .

David Rothstein, a researcher with Policy Matters Ohio, summarized the way they occur like this:

- The lender files a foreclosure, gets the foreclosure judgment in court, takes the property to sheriff's auction but doesn't bid on it if no one else does.

- The lender files as above, gets the judgment, sets the sheriff's auction, then cancels the sale at the last minute.

- The lender files as above but then never requests a sheriff's auction.

- The lender doesn't even bother to file foreclosure.

All of these actions leave the foreclosed property in the hands of the original owner who, in many cases, has moved out and is unaware the lender hasn't taken it. . .

No comments: