Punishing Foreclosure Victims--Some Banks Take One Last Shot

Real Estate Agent with RE/MAX Realty 100

Original content by John Mulkey

In an article today in the Milwaukee Journal Sentinel, it was reported that it’s becoming commonplace for lenders to refuse to take title to some properties following foreclosure. Why would a bank bother to foreclose and then abandon the property? It’s simple economics. Many of the homes just aren’t worth the bank’s efforts. But then, why would they foreclose? And who ultimately owns such properties? The answers are often as confusing an illogical as the creation of the subprime collapse that precipitated the problem.


What’s happening is a crime—perhaps not legally, but figuratively. Sometimes it’s a crime against the very people who have already suffered the most; and other times it’s a crime against neighborhoods trying to recover from issues of high crime and drug dealing. In the words of Catherine Doyle, attorney with the Milwaukee Legal Aid Society, “This is just the meanest and nastiest thing (lenders) could do. Even more profound is the terrible damage to the community.”


Abandoned homes become a blight on neighborhoods, havens for drug and criminal activity, and create fire and safety hazards. No longer sources of tax revenue, such homes are a drain on struggling cities resources, and ultimately cost taxpayers thousands more when ondemned and bulldozed.


The procedure, known in the trade as “walkaways,” is a growing problem, especially for cities, where most are pressed for revenue. The mortgages on these homes, the great majority of which are subprime, were often made by now-defunct mortgage brokers, and are being foreclosed upon by loan servicers on behalf of investor groups often thousands of miles away. And, unfortunately, there appears to be no solution to the problem.


Have banks lost their hearts, or is it they never had one? The image of the friendly neighborhood banker was perhaps always a utopian vision; but what they’re doing is egregious on a monumental scale. Throwing people out of their homes, only to have those homes bulldozed later, is not only inhumane, it’s sheer stupidity. Once the owner is forced out, the home falls in to disrepair, may be vandalized, and everyone loses. And, the irony is; when the bank walks away, the original owner is still on the hook for taxes, boarding-up and clean-up fees that can run into the thousands of dollars. It’s a game of no winners.


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Comments (2)

Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

Hi Matt,  John is right about the 'crime' on the neighborhoods.  It is a shame--a new form of 'white collar' crime, I guess!

Have a great week...

Oct 19, 2009 12:44 AM
Matt Yogerst
RE/MAX Realty 100 - Menomonee Falls, WI
Metro Milwaukee Real Estate

I have seen it a handful of times in Milwaukee. The properties owe more on back taxes then the bank will sell for and they just let the city "take it back". It is all about minimizing losses to a bank, and that is one way of doing it. They are a business as well, and although it isn't "criminal", is it right? One positive out of it is that Milwaukee does have a housing program to renovate properties. They will activily raise structures as well to make room for new development. So there is a positive side to things.

Oct 19, 2009 02:17 AM