Seems those clever lenders have another trick up their sleeve. Rather than take on the obligations of actual ownership they merely foreclose in the loan but do not take possession of the property. Recall from your extensive UberNerd™ education by Tanta and CR at Calculated Risk that lenders do not foreclose on people or property but loans. Now Barry Ritholtz chimes in at The Big Picture:
There are very significant costs to this. Consider what the potential impact of these property abandonments by the lender means:
- Total write off of the loan;
- Boarded up homes / neighborhoods;
- Loss of tax revenue to the local school district or town;
- Long delays before the local town, municipality, or state can take possession due to tax arrears.
Thus, these incomplete foreclosures/abandonments can have very significant impacts.
If this becomes widespread, we could be in the process of creating an entire new universe of suburban slums . . .
Just walk away. It's not just for borrowers anymore.