Bank walkaways

(H/t E)

There was an awful lot of coverage when homeowners were reportedly bailing out on their mortgages - (a lot of it pushed by the lending industry).

Shoe's on the other foot these days.

Here's The Dayton Daily News:

The so-called “walkaways” can occur along several different paths, but the effect is the same — after threatening or getting foreclosure, the lender attempts to abandon the usually vacant property, leaving the original owner, the neighbors and the city to live with the damage.

Owners often accumulate taxes and zoning enforcement fines on property they believe they no longer own.

Neighbors watch their property values decline as the vacant property deteriorates and is often broken into and stripped.

Cities then have to bear the cost of boarding up a structure, maintaining the lawn and, eventually, demolishing it.

If you're like me - that second sentence got your attention.

"Owners often accumulate taxes and zoning enforcment fines on property they believe they no longer own"

How does that happen?

Like this:

The house at 24 Glencoe Ave. looks bad on the outside.

[it] was purchased in January 2003 by the current owner, Donald Hennessey of McMurray, Pa. By October 2004, a foreclosure case had been opened, and Homecomings Financial Network, Inc. — which is owned by GMAC — was granted a foreclosure in March 2005. The property was ordered for sale at sheriff’s auction the following month.

Everything appeared to be on track until the appraisal required for a sheriff’s auction came in at $30,000 — well under the $71,792 that was owed on the mortgage. The sheriff’s sale was canceled in May and a few days later the lender dismissed the foreclosure.

So even though Hennessey thought the house had gone back to the bank, he still owned the vacant and abandoned property — and was on the hook for the growing property taxes and zoning fines from the city.

...

“I said I was sorry to inform them that the bank stopped the foreclosure, discharged the loan and never took title to the property, so it’s still theirs,” [Dayton Housing Inspector John] Carter said.

It gets better. The owners are on the hook for the unpaid bills because they "own" the house. Of course, they only own it because the market is depressed and their lender doesn't want it right now.

As the GMAC spokesperson in the story points out "the investor may decide to halt the foreclosure sale but reserve the right to foreclose at a later date, maybe when the market recovers."

That’s exactly what happened at 24 Glencoe. Homecomings dismissed the foreclosure “without prejudice,” meaning it still holds a lien on the property and can come back to foreclose later.

So these people are allowed to own the accrued fines and taxes until such time as the bank chooses to step in and take the place.

A commenter called SquareState nailed it: "How is it that individuals can't walk away from property they own without consequences, but banks can?"

Damn good question.