Everyone knows that home values are plummeting all over the nation, foreclosure rates have skyrocketed and people are walking away from their homes as a result. People are choosing to hand over the keys on their over-priced homes - especially when they're underwater mortgages - and leaving banks to clean up the mess and take the losses. And it's not just homes in middle-class or lower-middle class neighborhoods, either - decaying foreclosed homes are now a common sight in those expensive exurb developments that sprouted up in just about every state in the nation. But what most people don't realize is that now even the banks are walking away from foreclosed homes, because they've lost so much value that they're simply not interested in repossessing them and trying to resell them at losses. Instead, banks are canceling foreclosed home auctions and handing the keys back to surprised owners.
Bank walkaways are nothing new, but have always been exceedingly rare. Nowadays, however, the bottom just keeps falling out on the housing market in many parts of the nation, especially in older, poorer neighborhoods which saw home values rise somewhat with the speculative bubble, but were the first to plummet when the bubble burst. In fact, the decline in property values in these communities predates the current real estate collapse, and in hindsight might even be seen as early warning signs that the boom times were about to come to a crashing halt.
When a mortgage holder can't make their payments anymore, the banks foreclose on the home, notify the owner that he or she must leave, and then take possession of the foreclosed home in order to sell it and recoup some of their losses on the bad loan. Owners can either leave or refinance their underwater mortgage. That's the way things are normally done, at least. When the bank forecloses on the home and then walks away, the owner is left holding the bag again - and by the time the abandoned property comes back to them it's almost always a wreck. In some cases, the only thing left to do with it is demolish it - and the bill for that will be given to the homeowner too.They are also typically responsible for maintenance fees. To combat banks walking away and leaving homes vandalized and decrepit, cities are suing banks to clean up their properties and are winning. Cities are arguing that if people cannot afford to pay their mortgages, they of course will not be able to pay for the upkeep of the property. When homes are turned over to the banks, it's their responsibility.
Foreclosures are by definition unfortunate events, but they also represent opportunities for people who are looking for great bargains. Is there a high rate of foreclosures in your area, and if so, are people moving quickly to take advantage of them? .
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