Roach

Hit with foreclosures, Bank of America donating, demolishing homes
July 28, 2011|By Lindsey Rupp,

NEW YORK — Bank of America Corp., faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.

The biggest US mortgage servicer will donate 100 foreclosed houses in the Cleveland area, and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co., Citigroup Inc., JPMorgan Chase & Co. and Fannie Mae are conducting or considering their own programs.
Disposing of repossessed homes is one of the biggest headaches for lenders in the United States, where 1,679,125 houses, or one in every 77, were in some stage of foreclosure as of June, according to research firm RealtyTrac Inc. The prospect of those properties flooding the market has depressed prices and driven off buyers concerned that housing values will keep dropping.

“There is way too much supply,” said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., which works with lenders, government officials, and homeowners to salvage vacant homes. “The best thing we can do to stabilize the market is to get the garbage off.”

Bank of America had 40,000 foreclosures in the first quarter, saddling the lender, based on Charlotte, N.C. with taxes and maintenance costs. The bank, which unveiled the Cleveland program last month, has committed as many as 100 properties in Detroit and 150 in Chicago, and may add as many as nine cities by the end of the year, said Rick Simon, a spokesman.

The lender will pay as much as $7,500 for demolition or $3,500 in areas eligible to receive funds through the federal Neighborhood Stabilization Program. Uses for the land include development, open space, and urban farming, according to the statement. Simon declined to say how many foreclosed properties Bank of America holds.

Ohio ranked among the top 10 states with the most foreclosure filings in June, according to RealtyTrac. The state has 71,617 foreclosed homes, Cuyahoga County 9,797, and Cleveland 6,778, RealtyTrac said.
The tear-downs are in varying states of disrepair, from uninhabitable to badly damaged. Simon said some are worth less than $10,000, and it would cost too much to make them livable.

“No one needs these homes, no one is going to buy them,” said Christopher Thornberg, partner at the Los Angeles office of Beacon Economics LLC, a forecasting firm. “Bank of America is not going to be able to cover its losses, so it might as well give them away.”
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supply is in excess, driving the cost/price down...
eliminate cheap housing and you drive the cost of available houses up.
simple supply and demand .
Whatever it takes, to re-inflate that housing bubble.

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SageTree

Wow.... hopefully they use some of the old material to build homeless shelters or something.


It's screwed up because people need these homes whether than can pay or not.......


At least they aren't just going to sit dormant and maybe they can .... IDK.... grow some green space for the suburbs, if that's not crazy.....

Or hell.... at least let the family camp on the remains of their old home

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~1~

The ugly little secret is that most of the 'garbage' they want to take off the market are homes they tossed people out of and let sit dormant while the low life in our society ripped out the walls and floors for the copper, stole the fixtures to sell off to unscrupulous contractors and just let the property languish until it was no longer habitable...


But that's good, since if you were to actually put the homes on the market, it would be tough to justify a house costing $200,000 when there are six on this block alone. Good for the banks I mean, not so much the consumer. This way they get to actually realize the shortage of homes they have only created on paper.

However I do have some mixed feelings as with the demolition comes jobs so it is a good thing on one hand, it's just too bad the other hand balled up into a fist and jerked us all off.

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mothernature

Ya know, there are more and more people resorting to doing things like taking the copper from abandon structures. The harder it gets to live, the more the people will do what ever it takes to survive. Especially if there are kids involved. I don't necessarily think they are "low life's".

I would buy a fixture from a contractor for a low price if it meant the difference between fixing the bad one or letting it drip. I wouldn't consider him "unscrupulous", I would consider him a Robin Hood (of sorts).

Considering my tax dollars paid for the big bail out, I feel I should get something for my money.

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Sometimes sleep is the best revenge- Luke

The Rev

The real estate investment boom led to building a shitload of houses no one wanted. That's what happens when things are built only because someone wants to sell it for more than they bought it for, not when they want it for what it is. The right thing for the banks to do was to liquidate the entire stock of excess homes at whatever the market would bear, and take their lumps. However, despite economic realities, they tried everything they could to keep prices up as much as possible, and avoid having to live with their mistakes. Before, it was holding properties off the market and trying to rent them. Now, it's destroying the unwanted stock. Whatever happens, the market has to clear (that is, prices have to balance with available supply) before it can move forward, and all this bullshit is just slowing down that process.

It's just like the 1930's, except the ones fucking things up aren't the government officials, it's the banks. And until the real estate overproduction is dealt with, everything else gets dragged out, including any kind of real economic recovery (meaning, one in which the unemployment rate starts to return to normal).

You can't cheat supply and demand, dumbasses. No matter how many laws you can buy, or cards you think you have up your sleeves.



The Rev

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Roach

unemployment rate

only one problem with that wording Rev, is that it never reflects just how bad things are.
As the rate starts to go down, watch the public assistance applications go up.

Until employment gets back to normal, will most likely take 5 years to a decade.

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