24 Aug Foreclosed Homes Bulldozed by Bank Of America, Wells Fargo, and Chase
Stephen Gandel, senior writerover at Time Magazine, discussed the recent news from Bank of America of BOA’s plans to donate lots after bulldozing 100 foreclosed Cleveland homes. The lots will be donated to local government authorities. That donation adds to earlier donations of lots where 100 bulldozed Detroit homes once sat along with another donation of 150 lots in Chicago.
BOA is not the only mortgage company suddenly donating land to city or county governments or non-profit organizations. JPMorgan Chase has donated over 1900 homes or lots with demolished homes to city or county government. Wells Fargo also announced their donation in a recent article at DSnews.com:
â€œWells Fargo is pleased to have been the first bank working with the Cuyahoga County Land Reutilization Corporation to donate both properties and funds to the Land Bank,â€ said
Russ Cross, Midwest regional servicing director for Wells Fargo Home Mortgage, says the company will be looking at additional properties it can contribute to the Cuyahoga County Land Bank this year.
Cuyahoga County Land Bank is a Cleveland-area land organization (actual name is Cuyahoga County Land Reutilization Corporation, but it is informally known as the Cuyahoga County Land Bank) formed in 2009 by two county commissioners and the county treasurer serving as initial directors and was formed in response to the wave of foreclosures hitting Ohio. The Ohio legislature passed new legislation which provided for the establishment of nonprofit corporations to promote, develop, manage, and facilitate the reclamation, holding, rehabilitation, and reutilization of vacant, abandoned, tax-foreclosed, and other real property. The first one to be established was the Cuyahoga County Land Bank. The Land Bank has now acquired 1,200 properties and promotes collaborative agreements with the foreclosing mortgage lender so that the properties can be revitalized and become an asset to the community.
Mr. Gandel’s article goes on to state:
The banks do the deals because once the properties are donated they no longer have to pay taxes or for upkeep. Tax experts say the banks may also be able to get a write off for the donation. That appears to be a better deal than trying to repair some of these homes, which according to aBofAspokesperson are more economical to demolish than fix up. The local governments like these deals because they get free land to develop or use for open space. Cleveland-based Cuyahoga County Land Reuntilization Corp., which inked the deal with BofA, has been one of the most aggressive local government organizations in striking these deals. Housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all, dragging down home prices in general. An oversupply of homes on the market has been once of the big problems plaguing real estate. At the end of June, it would take nine and a half months for the current number of homes on the market to sell. The housing market is considered healthy when supply equals six months of sales. So taking some of these homes off the market for good could remove some of the inventory drag.
Mr. Gandel concludes that banks and other entities are ready to do something new in order to provide stability to the housing market. This writer would suggest….mortgage modification through the bankruptcy process might bring more stability than knocking down houses.
Hat tip to Yahoo: http://news.yahoo.com/bulldoze-way-foreclose-102000063.htmlfor reporting Mr. Gandel’s analysis.
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