generalspeaking

Zombie Mortgages, Killer Homes

What an unbelievable nightmare home ownership in the United States has become for far too many people who have fallen on hard times.

And that includes not only those who were enticed by financial-institution-approved schemes in tandem with real estate brokerages to 'buy' homes they could not possibly afford, paying little-to-nothing down, on insufficient salaries, supported by worthless paperwork that eventually brought the international financial community to its knees, but people who lost their employment in the process of the financial downturn and suffered the consequences.

Having lost their jobs they could no longer pay their mortgages. And then the banks took ownership, informing home owners they must vacate their homes, with the bank foreclosing.

And then, because there was a glut of homes on a market that could no longer afford them due to large unemployment figures and financial insecurity, the banks realizing they had white elephants on their hands, rescinded their foreclosure decisions, informing homeowners they still owned their homes and would have to continue paying mortgages, taxes and upkeep.

In many instances, the banks failed to communicate to the former owners - who had moved on in the belief that foreclosure had been completed and their homes put up for auction at a sheriff's sale - that they remained responsible. Only to be shocked into incredulity when they were invoiced for back taxes, for municipal services, for lapsed mortgage accounts. And, since they were no longer resident in their houses, they had fallen into disrepair, been looted, and become derelict.

The houses became an impossible burden, too decrepit to be lived in, looted of anything that could be sold or re-used, like electrical and plumbing; everything falling apart, and yet the ex-owners who suddenly, at the proclamation of the bank that realized it had no wish to saddle itself with an expensive-to-upkeep albatross on a sagging market, found themselves responsible. They had no legal out.

"These people have become like indentured serfs, with all of the responsibilities for the properties but none of the rights" explained retired Cleveland-Marshall College of Law professor Kermit Lind, reviewing the intolerable situation of what has come to be described as "zombie" mortgages. Since 2006, ten million homes have fallen into foreclosure, according to Realty Trac. Some of them may be occupied by owners living there without paying their mortgages, but ensuring upkeep of the property.

Many more have been tangled in the robo-signing scandal, banks spinning out of whole yarn reams of fraudulent documents to foreclose on as many homeowners as they could manage. In other instances, homeowners moved out after receipt of notice of a foreclosure sale, convinced their homes were now in the ownership of the banks.

"There are thousands of foreclosures in limbo, just hanging out there, just sitting, with nothing being done", explained Cleveland housing court judge Raymond Pianka. His own court cases involving derelict properties have doubled to one thousand in the past two years, due to homes vacated by those who left them anticipating foreclosure, and learning later that they were still legally responsible for their homes.

The established routine was: banks sending out letters notifying homeowners of impending foreclosure sale with auction at a sheriff's sale in the works. Homeowners moved out, the house sold, banks applied the sale proceeds to the unpaid part of the original mortgage. But since the housing crash financial institutions realized decaying houses on crowded markets would gain them nothing. Banks began walking away just as people used to walk out on their mortgages.

Leaving them able to "sell the unpaid debt to debt collectors, sometimes noting to the court that the loan has been charged off", and in effect leaving the former homeowner in the situation where they remained liable for the home they had been formally told to leave. There are no regulations requiring banks to inform homeowners about this practise, so they don't bother to.

"The banks do not answer enquiries, they do not answer phone calls, they do not answer letters", complained Judge Patrick Carney of the Buffalo, N.Y. housing court. His caseload of zombie titles has soared into the hundreds. "The whole situation is surreal", he says.

Labels: Controversy, Corruption, Culture, Economy, Social Failures, United States, Values

posted by Pieface @ Sunday, January 13, 2013