Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Guess they went from coveting these homes to not wanting them at all. I wondered when the "tipping point" would come on this REO asset to liability issue. AND, of course, they are shifting their tax burden onto us again.
http://bigpicture.typepad.com/comments/2008/04/the-advantages.html

Some lenders are approaching the Foreclosure process a little bit, how shall we delicately call this -- differently. They are considering the sale decision prior to even taking possession. Their conclusions may surprise you:

"In some cities that have low property values, where there are dense concentrations of foreclosures, you see lenders who file foreclosure proceedings but don't actually take control of the properties, because the lenders have to maintain them and pay taxes on them."

"There are areas in some parts of the country where property values are quite low, and there are no large-scale expectations of them going up. They don't know that they will ever recoup those costs," and so the lenders never re-take title to the properties, allowing them to become derelict."  (emphasis added)

There you have it: Abandoned, Non-REO Foreclosures.

The local market conditions are what seems to determine the abandonment decision. In a region where the job and real estate market is doing anything better than "a little soft," I would surmise that abandonment makes no sense at all.

However, at a certain point, in a weaker region, with declining neighborhoods, certain lenders might make the decision to simply walkaway from a large swath of (potential) real estate holdings, on the simple basis that it might be cheaper to do so.

There are very significant costs to this. Consider what the potential impact of these property abandonments by the lender means:

- Total write off of the loan;
- Boarded up homes / neighborhoods;
- Loss of tax revenue to the local school district or town;
- Long delays before the local town, municipality, or state can take possession due to tax arrears.

Thus, these incomplete foreclosures/abandonments can have very significant impacts.

If this becomes widespread, we could be in the process of creating an entire new universe of suburban slums . . .

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Fed Up
I honestly don't think that is anything new - explains all of the empty houses that we have been seeing for years. 

A friend'shouse was foreclosed on almost a year ago.  It is a beautiful house, but she actually gave it back.  It was not predatory lending, escalated appraisal or anything, they just could not make the payment. 

It took the mortgage company almost a year to get it on the market for sale.  She bought it for $105,000 it is now for sale for $61,000.  Wish I had the money the place is a real deal! 
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