Thursday, April 03, 2008

Forget REOs We've Got MOAs

MOA stands for Municipal Owned Adandoned.

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.

10 comments:

Casey Serin said...

The Moa is extinct, just like I will eventually be, 5 minutes after I meet my cellmate...

F I R S T

Casey Serin said...

BTW, you can see never-before-released pix of me, when I was in Seattle in mid-2007. The guy I mooched a meal from just put them up.

I look positively filthy, and positively gay. Par for the course, really...

Bill said...

Detroit homeowners have figured this one out.

Once the abandoned home is occupied (by the homeless, or worse), call the police to roust them out, then go back in the middle of the night and torch the now vacant house.

Eventually the city will clean up the debris and you'll have a nice "side lot" instead of a crack den next door.

Max said...

We're starting to see shades of this in the Sacramento area. Cities/maintenance districts are refusing to perform minor tasks like weed removal on median strips and sidewalks near abandoned developments. No tax money coming in, no work done.

At some point, the fire district will pick up the tab once there's a fire hazard, but that's several months out.

Rob Dawg said...

The fire department contracts the work and bills the homemoaner of record. If it isn't paid it becomes a tax lien with all that implies. Because they cannot "technically" fine you for this the mechanism is a bill for work performed, prevailing wages of course, and an "administrative fee" of several hundred dollars.

Agent #777 said...

So most foreclosed "owners" move out ahead of time, but if this is not going to be taken over by the lender, could they not just continue to live there as before? Heck, they could even pay the taxes to keep it from going the tax deed route.

The extension of all this is that the bank still owns the property. Perhaps they will never have to mark it to market if everything occurred in this manner? No profit made, but no big loss either.

Sounds like a win-win to me!!

Lou Minatti said...

Casey, holy moly you have some ripe zits. Why doncha pop 'em once in a while?

Lou Minatti said...

So most foreclosed "owners" move out ahead of time, but if this is not going to be taken over by the lender, could they not just continue to live there as before? Heck, they could even pay the taxes to keep it from going the tax deed route.

I was thinking the same. This wouldn't work in California, where houses actually are worth something. Detroit, OTOH. This would be great for the city.

sm_landlord said...

"Recall from your extensive UberNerd™ education by Tanta and CR at Calculated Risk that lenders do not foreclose on people or property but loans."

Um...good luck with that ploy. You can't take possession of the collateral without taking possession of the obligations. Nice try. Sorry about that, suckers.

ny said...

suggesting that you should torch vacant house is NOT COOL.

fire responders do not check foreclosure lists,