Sunday, March 04, 2012

Real estate deflation, municipal anti-blight efforts delay foreclosures

In addition, states and municipalities have grown more aggressive in the last few months in trying to force banks to maintain foreclosed properties, which have become blights on neighborhoods from coast to coast. Last month, lawmakers in Florida and courts in New York considered new ways to require lenders to alter loans to keep people in their homes or complete foreclosures more quickly.

“Under normal circumstances, the banks would be able to cover the cost of maintenance, upkeep and property taxes by just reselling the property, but these are desperate times, and banks are resorting to somewhat desperate measures in some cases,” said Daren Blomquist, a vice president at RealtyTrac, a real estate analysis firm. “It is more of a factor now because property values have come down and will not cover all these costs when the banks resell the property, if they can resell the property.
Foreclosure loses its utility when lenders can't make the numbers pencil out and leaving the homeowner in place can stave off local governments targeting REOs that aren't being maintained.

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