This morning the Press Democrat ran a front page article titled: “Fight Against Blight“. It details the plight of Phyllis Sharrow of Petaluma who has the unfortunate luck of living next to a foreclosed property. Weeds have overtaken the lawn of the abandoned home next door and her property value is being affected. Calls to Bank of America to try to get the place cleaned up go unanswered. This has been going on for 2 years prompting her to put a sign outside her home with an arrow pointing at the foreclosure stating: “Bank of America. Your taxpayer bailout dollars at work. Our home values lose!”

And there’s a bigger shock for poor Ms. Sharrow: According to the Healdsburg Housing Bubble blog, Bank of America issued a notice of foreclosure but never completed the foreclosure sale. In other words, Bank of America walked away, letting the property sit there, in limbo, the owners gone and no one taking responsibility for it.

It looks like the home was never foreclosed on and therefore is not owned by the bank.

Is Bank of America just sitting on this loan and letting the property deteriorate? I’ve heard that banks are reluctant to foreclose because A) this forces them to recognize a loss on the loan, and B) if they do foreclose they are the owners and are responsible for the property taxes.

To me it looks as if that is what is happening here. But how long can this go on? You would think the banks would want to flush out these loans before the mid- to high-end foreclosure crisis is upon us.

Yes, you would think that — especially from banks propped up by a taxpayer bailout. So far, however, servicers are too swamped to modify large numbers of loans and — as this case illustrates — banks are walking away from their properties, even beyond the Rust Belt.

You can’t blame homeowners like Ms. Sharrow for feeling like they are hardly getting their money’s worth from that bailout. Maybe she needs to bring that yard sign to Washington, where few are paying much attention to the problem of bank-owned abandoned homes. Instead, as Sen. Dick Durbin (D-Ill.) pointed out recently, the banks own the place.

And those banks aren’t up against outraged and powerful lawmakers, calling them on the carpet for these practices. Business just goes on as usual. Meantime, in the real world, there’s a frustrated neighbor, a two-year battle, and a yard sign calling for attention.

Instead of waiting for houses to become abandoned and then pulling them down, local leaders are talking about demolishing entire blocks and even whole neighborhoods.

The population would be condensed into a few viable areas. So would stores and services. A city built to manufacture cars would be returned in large measure to the forest primeval.

“Decline in Flint is like gravity, a fact of life,” said Dan Kildee, the Genesee County treasurer and chief spokesman for the movement to shrink Flint. “We need to control it instead of letting it control us.”

Kildee’s land bank has become a national model for other communities wanting to take control of abandoned and trashed properties, clear blight, and find other uses for the land. TWI has reported extensively on land banks and the problems of vacant properties, as well as the proposals in Flint to begin shrinking the city. Flint isn’t alone, either. The New York Times reported last month that in Saginaw, Mich., and other hard-hit cities, Habitat for Humanity concentrates on tearing down blighted houses, rather than building new ones.

All of this is a testament to the dramatic crisis in some cities that hasn’t seemed to draw the attention of national policymakers. Lenders and the government can modify all the loans they want and hold off on new foreclosures, but that will do nothing to address the dilemma posed by vacant properties. It’s the back-end of the foreclosure process, and the damage is becoming permanent. The drastic measures in Flint — there’s no other way to describe cordoning off abandoned portions of the city and leaving them behind — should be a wake-up call. But it’s not clear anyone is listening.

Communities that have land banks — and there aren’t enough of them — need major resources from the federal government to address the scope of the problem. There’s no way they can do it on their own. Until that happens, if it ever does, expect more troubled communities to resort to things like shrinking their cities and enlisting charitable groups to tear down deteriorated houses.

As the mortgage crisis continues, it’s become clear that in some markets, banks and lenders dumped their trash and walked away, leaving cities that already weren’t thriving even worse off. It’s almost unbelievable to hear local officials in these areas discuss abandoned swaths of their land. (Kildee talks about creating a new “Flint Forest.”) But that’s the reality these days, in the American cities and neighborhoods we’ve simply left behind.