If You Can’t Rent a Foreclosed Property Back to the Owner, You May as Well Throw a Party
With a sprawling, multi-million dollar mansion in Sandy Springs, Ga., sitting empty for two years, some enterprising folks nearby had an idea: Fill it with a big party.
According to USA Today, the Halloween bash at the six-bedroom mansion was a huge success, drawing 1,000 people. It ended only when traffic gridlock got so bad police had to be called.
But the party wasn’t an isolated event. Similar unauthorized parties are taking in place in other cities with vacant homes — evidence of how the problem of empty and foreclosed homes are causing neighborhood blight and other problems. Although some places, like the Phoenix metro area, are showing some signs of progress in dealing with vacancies, there’s been no widespread solution.
As a result, for some neighbors, falling property values from empty homes aren’t the only issue they have to deal with:
In San Diego County, young people have taken over foreclosed houses for late-night rave parties, says Detective Jeff Lauhon of the San Diego County Sheriff’s Office. Lauhon says the culprits were well-organized in some instances: A young couple would get a realtor to give them a tour of a foreclosed house — usually in a rural area on a large property. The woman would distract the realtor while the man surreptitiously left a window open or door ajar. They would then return and invite others for parties that lasted until the wee hours.
At least they’re not pushing dump trucks out of windows.
A party is a temporary way to fill a house, of course. For many cities, the long-term problem of vacant and abandoned foreclosed homes remains a crisis.
As we reported last week, Fannie Mae has a new program to allow owners of foreclosed homes to stay in their properties and rent them back for as long as a year. But filling foreclosed homes with former owners-turned-tenants is also beginning to take hold, on its own, in some of the Sunbelt states that have been hit hardest by the foreclosure crisis, according to Alan Mallach, a visiting scholar with the National Housing Institute and the Brookings Institution.
Mallach told TWI last week that investors increasingly are buying up bank-owned foreclosed homes in the Phoenix area, then renting them back to their former owners. The strategy is to allow the rental for at least five years or so, by which time the investor probably can sell the house again at a profit, while the borrower has a chance to improve his credit. And the best part: Some investors say their plan is to offer the house for sale first to the former owner.
Everybody wins, and if the idea spreads, it may be one way to address the vacancy problem.
Until then, there’s not a lot else out there to clear the backlog of bank-owned homes sitting empty in many neighborhoods.
So in the meantime, unauthorized parties will just have to do.