Abandoned and Neglected Foreclosed Homes So Damaged They Won’t Sell
CNN picks up on a mostly overlooked component of the mortgage crisis that TWI has been following: Growing numbers of trashed and abandoned bank-owned foreclosed homes. Some of the houses left behind by banks are so damaged they’re never going to sell, CNN reports, citing mortgage analyst Thomas Popik:
“About a third of all of the foreclosed properties nationwide have been so damaged, either by the previous owners or by criminal gangs coming in after the foreclosure, that they no longer qualify for standard mortgage financing,” Popik told CNN. “So there is going to be all kinds of government programs to help, but if they don’t qualify for standard mortgage financing, there’s no one to buy these properties.”
Popik says responses from thousands of real estate agents nationwide to the questionnaires he sends out quarterly indicate that badly damaged foreclosed homes — so-called “distressed” properties in real estate jargon — are a much bigger element of the national housing picture than officials in Washington have acknowledged.
Exactly what we’ve been saying. Even worse is that some of the banks with neglected Real Estate Owned properties, or REOS, have received billions of dollars in TARP money.
Either the houses won’t sell at all, in which case some banks will likely abandon them entirely, or they’ll be dumped on the market at pennies on the dollar, sold to speculators and flippers who probably don’t care much about the neighborhoods where the homes are located. The scandal isn’t just that the banks allow their foreclosed homes to deteriorate. It’s also what happens to the people who have to live next door.