by Bill McBride on 8/14/2005 12:17:00 AM
Sunday, August 14, 2005
Real estate investors are just walking away from residential property and lenders are getting stuck. Some lenders do not want to take title to the worthless property and the city has started a campaign called the "shaming sign" - placing signs on abandoned property with the names of the lenders' executives. This has induced some lenders to take title and either fix up or demolish the abandoned homes.
This is a story from the Great Depression ... except it is happening right now in Dayton, Ohio.
... others have fallen victim to a conspiracy of carelessness and greed by lenders and their clients, many of them investors. When loans go bad, both duck for cover, their abandoned properties becoming a cancer on neighborhoods.With lax lending restrictions it is no surprise that areas with little or no appreciation are seeing rising foreclosures. I wonder if the "investors" were able to borrow against the home before just walking away from the loan.
This reality has led to a new strategy — the "shaming sign." Those who cut out on neighborhoods are held up to richly deserved embarrassment.
A major bank recently took charge of one of its neglected foreclosure properties; a bank official didn't like seeing his name on a sign.
Another big bank has been bobbing and weaving to avoid responsibility. Unable to sell a foreclosed property, it won't take title itself. Instead, it filed suit against its customer, leaving the property to languish and the city holding the bag.
Another property, though, on Helena Street could have a happy ending. A representative for the owner says the owner will tear the building down and deed the property to an adjacent community garden.
That action hasn't happened yet, but should it comes to pass, it will demonstrate the power and potential of the city's attack on abandoned properties.