Extreme Measures in a Tight Housing Market
A new twist in the foreclosure world…some banks that are heavy with construction loans, have been foreclosing on homebuilders whose unsold spec homes have lost significant value with the real estate market decline. Some of the property that these banks own includes housing units in varying stages of construction. Believe it or not, some banks have begun demolishing excess properties in order to avoid the costs associated with finishing the construction and marketing the houses. Banks claim that this extreme measure increases the safety of neighborhoods by preventing squatters and vandals from trespassing. After demolition, materials used in construction are turned into mulch for landscaping or salvaged for usable materials that can then be resold.
In another extreme measure, a town in California has passed a law making an unmaintained foreclosed property a criminal offense. The town was fed-up with national lenders not maintaining abandoned properties which contributing to the decline of the entire community. The lenders claim that upkeep and repair is a normal part of business and that this new law has not made them take any additional steps. However, banks now must register homes as soon as they start the foreclosure process so that they can be monitored. Lenders can be fined up to $25,000 for properties not in compliance with city codes.
Obviously, maintaining a property that is on the market is a smart decision for the bank and for the surrounding properties. In fact, one proactive lender has started hiring local real estate agents to manage properties and handle maintenance issues as they arise.
Source: The Wall Street Journal
What Others Are Saying
Currently there are no comments. Feel free to add yours below.
Add Your Thoughts