I am rarely stunned by the things I read about when it comes to foreclosure. Then I read this in Sunday’s New York Times:
“Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.”
That little paragraph is not entirely explanatory. Apparently some banks (and this has already happened in Jacksonville according to the article) are looking at their options after having the judgment entered, but before the sale, and having the sale canceled and walking away. In turn, the homeowner still has title (clouded, for sure) and probably no mortgage to pay. Of course, this is primarily happening to the most dilepidated properties or those that are the most upside down.
Regardless, this is a bad sign as these homeowners (who may have walked away themselves) now have to deal with the property. In the end, the property will most likely be sold at a tax deed sale by a governmental entity (in Florida, the county would do it.) In the interim, the homeowner will get letters and demands from the municipality to conform to local ordinances or to pay back taxes.
The only good news for homeowners is that if you can work with the municipality, you may be able to keep your property and potentially have no mortgage to pay. Of course, you may want to consider quieting title, but that may bring back the old mortgage.