http://beta.local.yahoo.com/news-home-vandalized-given-back-woman.html
All too common....
Background and Procedural Facts:
So, when the bank forecloses, they often give you an incentive to leave and just get out so they don't have to go through the longer disputed foreclosure process. It's called "Cash for Keys." Or, they just boot you out sooner or later.
Usually, when you leave the house and let the bank know, they come around and winterize the place so the pipes don't burst, etc, etc. It's part of a duty to mitigate damages so they can sell the house at sheriff's sale and apply the money they get there towards paying off the loan balance. In some states, you can have what's called a "deficiency judgment" against you if you owe more on the loan than the house brought in at Sheriff's sale. Note: in Ohio, they have deficiency judgments, but the bank has a 2 year SOL to come after you for them. So, it's really important that the bank take care of the house when you let them know you're leaving it, and they're required to....
They didn't here. The place went to hell, and all of it was foreseeable. Thieves and drug addicts hung around, ruined the place and stole nearly everything, pipes, and pretty much whatever.
To review, bank was taking house, did nothing to safeguard or winterize it, and screwed up so badly that they just let her have what was left of the place. It's now uninhabitable from the bank's neglect. Her life is turned upside down, and nobody's gonna do much of anything.
Argument:
This is really why we need something that actually modifies mortgages in a meaningful way that keeps people in these houses. First, on average these places were simply never worth what they were purchased for to begin with. Second, foreclosure leaves a bunch of vacant houses going to hell and ruining property values for everyone in the area. Third, speaking of vacant, these places aren't doing anyone any good sitting empty (separate and aside from the second argument), we've got a bunch of people who need a place to live and empty houses.... Fourth, who fixes this gutted house, or does it stay gutted and blighted? Fifth, it just looks like neither the bank nor this woman, as owner, are going to get anything out of this; it's become a zero sum game. Sixth, let's look at it from the taxpayer standpoint for a second, locally, we're gonna have to pay to condemn and bulldoze a lot of buildings like this (and in worse conditions). This could be avoided by letting the woman stay in the house so it doesn't go to hell. Moreover, this place was a haven for crime and drugs for years under the bank's neglectful stewardship.
Counter:
You could say that this is all or mostly the owner's fault, that she shouldn't have taken out a loan she couldn't pay back etc.
Counter to Counter:
She bought the house in the 1980s, and then she certainly could make the payments. She had no reason to think she ever wouldn't be able to and it is kinda hard to predict almost 30 years out into the future. This isn't an irresponsible person in my eyes, and as someone who deals with foreclosures in a boots on the ground sense, that often isn't the case. How do you plan for losing your job 4, 5, 6, 7, 8, or more years down the line? You really can't if home ownership is on the table. Fact is without a job, the overwhelming majority of people out there couldn't afford their mortgage or rent or whatever. The only way these people can "plan" for not being able to make a payment due to job loss is to never buy a home, but even then, you can't plan for the rent without a job either.
Basically:
No to vacant houses, no to people being thrown out of homes, no to setting up havens for crime and drugs, no to pawning off the bank's bad investment on local taxpayers, no to ruining the property values of entire neighborhoods. Yes to a responsible foreclosure modification program.
It might be a good idea to rethink the depreciation rules for property. People I know in the industry point out that the best thing about "investing" in property is the tax write off due to depreciation of the value of the home, even when the value of the property is actually going up. I'd like to see either doing away with it entirely, or else doing away with it for properties not being occupied by the owner as a primary residence.
Call me crazy, but I do not think it is the first, best destiny of property to be owned and leased out by landlords. It's a complicated issue, but the fact that the system is designed more or less from the ground up to have huge amounts of property owned by people who do not live there is a bad thing.
Renters typically can't maintain properties, affording it, or having the skill/desire to do it. They also can't manage to get the financing. Condos are closer to what you're saying and that has problems too. Get into any type of density where you end up sharing a wall or a floor or a ceiling and especially large things like roofs, pavement/parking/landscaping and things get hard quickly.
Even owning a personal residence for your partners, friends, family, whatever, isn't exactly easy. Shared space or housing in any proximity can be difficult.
Concerning depreciation, that's pretty much a fundamental of accounting with most assets. It starts with a basis of value that goes down as time accumulates and inevitably damages the property or requires maintenance, repairs, and replacement. I'm not really sure how you'd "rethink" depreciation. Moreover, the value of property does not always go up, as we've recently seen with the housing crash. I don't quite get why depreciation needs to be modified or what that has to do with anything.
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Topic: Calm and Cool Progressive Discussion Thread (Read 1289728 times)