Deckard Posted July 27, 2011 Share Posted July 27, 2011 (edited) The US house price crash is forcing banks to get rid of properties the hard way. Bank of America Corp. (BAC), faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer. The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co. (WFC), Citigroup Inc. ©, JPMorgan Chase & Co. (JPM) and Fannie Mae are conducting or considering their own programs. Disposing of repossessed homes is one of the biggest headaches for lenders in the U.S., where 1,679,125 houses, or one in every 77, were in some stage of foreclosure as of June, according to research firm RealtyTrac Inc. of Irvine, California. The prospect of those properties flooding the market has depressed prices and driven off buyers concerned that housing values will keep dropping. “There is way too much supply,” said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., which works with lenders, government officials and homeowners to salvage vacant homes. “The best thing we can do to stabilize the market is to get the garbage off.” Bank of America had 40,000 foreclosures in the first quarter, saddling the Charlotte, North Carolina-based lender with taxes and maintenance costs. The bank announced the Cleveland program last month, has committed as many as 100 properties in Detroit and 150 in Chicago, and may add as many as nine cities by the end of the year, said Rick Simon, a company spokesman. The lender will pay as much as $7,500 for demolition or $3,500 in areas eligible to receive funds through the federal Neighborhood Stabilization Program. A joy to behold, don't you think? More at the link. Edited July 27, 2011 by Deckard Quote Link to comment Share on other sites More sharing options...
chronyx Posted July 27, 2011 Share Posted July 27, 2011 The US house price crash is forcing banks to get rid of properties the hard way. A joy to behold, don't you think? More at the link. I am actually unable to come up with a coherent reply. This is just...astounding. All that work, materials, labour. Yeah, that must be where the problem lies. Quote Link to comment Share on other sites More sharing options...
The Eagle Posted July 27, 2011 Share Posted July 27, 2011 So they would rather bulldoze the house (more expenses) then let the people keep it? Quote Link to comment Share on other sites More sharing options...
MarkG Posted July 27, 2011 Share Posted July 27, 2011 So they would rather bulldoze the house (more expenses) then let the people keep it? Why would anyone pay their mortgage if they saw the bank letting other people stay in a house they've stopped paying for? Quote Link to comment Share on other sites More sharing options...
Fairies Wear Boots Posted July 27, 2011 Share Posted July 27, 2011 Bulldozing houses to keep prices up, err stop them falling as much. W*nkers. Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted July 27, 2011 Share Posted July 27, 2011 (edited) Could it be tax issue, as we see here with business rates on empty warehouses? Many get bulldozed after the rates kick in. I guess that is the ultimate HPC, the house is now worth less than zero to the bank. Edited July 27, 2011 by cheeznbreed Quote Link to comment Share on other sites More sharing options...
The Eagle Posted July 27, 2011 Share Posted July 27, 2011 (edited) Why would anyone pay their mortgage if they saw the bank letting other people stay in a house they've stopped paying for?Your thinking is flawed since this only applies in locations where the house has no resale value.Why should anyone pay the bank for a house that is clearly worthless for the bank? --- Edited July 27, 2011 by awake_eagle Quote Link to comment Share on other sites More sharing options...
Venger Posted July 27, 2011 Share Posted July 27, 2011 Could it be tax issue, as we see here with business rates on empty warehouses? Many get bulldozed after the rates kick in. I guess that is the ultimate HPC, the house is now worth less than zero to the bank. Deckard provided the link to the full story if you didn't see it. I didn't see it at first. There could be a tax loophole in it. Donating a house may create an income-tax deduction, said Robert Willens, an independent accounting analyst based in New York. A bank might deduct as much as the fair market value if a home wasn’t acquired with the explicit intent of knocking it down, he said. Still, the knockdowns aren’t likely to outpace foreclosures, said Rick Sharga, RealtyTrac’s senior vice president. Foreclosures may accelerate as banks clear a backlog caused by soft real estate markets and legal disputes over tactics used to seize homes.“These sorts of programs will basically only be nibbling on the edges,” Sharga said. Quote Link to comment Share on other sites More sharing options...
Deckard Posted July 27, 2011 Author Share Posted July 27, 2011 (edited) Deckard provided the link to the full story if you didn't see it. I didn't see it at first. There could be a tax loophole in it. Correct, there's a tax advantage for some of these banks - but whichever way you look at it, it's still a very extreme move by the banks. I guess most of these properties are too run down to save, and let's not forget property taxes. Edited July 27, 2011 by Deckard Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted July 27, 2011 Share Posted July 27, 2011 Deckard provided the link to the full story if you didn't see it. I didn't see it at first. There could be a tax loophole in it. sorry, I completely failed to notice the link. Must look harder in future.. Pretty shocking stuff, a bit of balance-sheet chicanery means that even in a near-absolute HPC, you can be denied a home no-one else wants. Quote Link to comment Share on other sites More sharing options...
tahoma Posted July 28, 2011 Share Posted July 28, 2011 Here are houses, 90% complete, being bulldozed because they did not meet the US building codes. We are talking small mansions by our standards here. It made more sense to 'doze them than bring them to spec, once you added the property taxes.What it does illustrate is how devoid of substance the typical US house is. Wood and plasterboard. Quote Link to comment Share on other sites More sharing options...
Milton Posted July 28, 2011 Share Posted July 28, 2011 (edited) We already know that US Banks are sitting on hundreds of thousands of repossessions and just drip feeding them into the market, in an attempt to keep house prices high. I am the Price SystemEarly in social life, I discovered that values are determined by human desire and scarcity. Value and Scarcity are my cornerstones. I dressed them up so no one would recognize them, and baptized them Supply and Demand. In this guise they have befuddled people for ages. And now, economists proclaim Supply and Demand to be natural laws that dictate prices. This takes the moral blame off me, the Price System, and creates the impression that nothing can be done about it Supply and Demand has been a useful myth for me. Behind its cover I have always restricted the Supply and never allowed Demand a free avenue of expression. Actually, there is no ceiling to Supply except ability to produce, and no limit to Demand except ability to consume. But I can't afford to let it become widely known that economic laws are not physical laws, neither measurable nor verifiable. Edited July 28, 2011 by Milton Quote Link to comment Share on other sites More sharing options...
R K Posted July 28, 2011 Share Posted July 28, 2011 I'd be worried if I lived in Burnley. Quote Link to comment Share on other sites More sharing options...
muggle Posted July 28, 2011 Share Posted July 28, 2011 Why would anyone pay their mortgage if they saw the bank letting other people stay in a house they've stopped paying for? Amazingly, this is actually happening this side of the pond! Quote Link to comment Share on other sites More sharing options...
tahoma Posted July 28, 2011 Share Posted July 28, 2011 I'd be worried if I lived in Burnley. I'd always be worried if I lived in Burnley. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.