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. 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. This is especially true 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. A few years ago, lending giant Fannie Mae even attempted to slow the bleeding by offering homeowners in foreclosure rental options.
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 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 along with the responsibility 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? If so, are people moving quickly to take advantage of them?
Wow this is news to me! I guess the banks can’t really absorb all those foreclosed homes.
Yea – having to maintain all those foreclosed homes costs a lot of money.
This is a great time for first time home buyers to take advantage of the market and possibly get a cheaper home, when other times you could not have afford it.
This is pretty good news for people who thought they might be losing their homes. Though maintenance might not be much, I can’t imagine how people are paying for their homes without jobs.
That’s where you could be wrong James – if a home has been abandon for a long while – it could be vandalized, and the money to fix the home can be a lot.
Most of these people are still occupying their homes, so the chance of it being vandalized and destroyed by squatters is low.
This is crazy! Banks walking away? Times are getting rough, I just lost my job recently.
I don’t want my house back even if it was offered. They foreclosed on me after i was laid off, I begged and begged them to work with me, they took a hard stand and sent me a letter that the house was to be auctioned off, of course it was vlaued at 135,000 when i bought it, they had it re-valued at 65,000. I filled out mountians of paperwork to try to get a remodifacation, nothing. I left the weekend it was to be auctioned off and haven’t looked back. It’s been empty over a year, I wouldn’t take it back now for anything. It’s cheaper to rent. When something breaks, the landlord fixes it, I don’t mow I don’t pay 400.00 for electric in a house and I don’t pay water at all. I am happy to rent, and use my money for other things i have always wanted but couldn’t afford because of house payments, ect. I am a happy renter!!!!! They screwed themselfs because they were as* holes when I was begging for help. They still call me, WHY?
“This is a great time for first time home buyers to take advantage of the market and possibly get a cheaper home, when other times you could not have afford it.”
you’d be an idiot to buy a house now
especially to base your purchasing decision on
past prices and rates
This is great. So I can live here indefinitely if i just keep paying my property taxes? with no mortgage payments? This seems like a wind fall for me. I can basically a house for free as I put almost nothing down and defaulted on payments within 6 months or so. it was right around the 2008 financial crisis.
I have been living in my home, they said it was going into foreclosure but then i never heard anything after that and just kept living here, been living here for almost 3 years now mortgage free.
i wanted to fix one of the sinks but didn’t want to put any more money into the house but if this is now my house forever. that is hot. anyone know for sure?
I basically started researching this because it’s almost 4 years coming up living here for free and I didn’t know how much longer this would last. reading this. sounds like this is my home for life now.
I can even rent it out and start making some rental income from it.
I also definitely agree with Patti, renting was so much cheaper and stress free.
but nothing beats no rent or no mortgage.
just paying for electric and property taxes comes out to like 300 or so a month, much cheaper than renting or mortgage.
found out my mortgage company has been paying the property taxes on my property too for the last 4 years… what does that mean? they will still eventually want to foreclose on it then is what it seems like.