Bank of America Adopts Different Approach to Cut Foreclosures



The biggest US mortgage servicer, the Bank of America, is adopting a different approach towards foreclosures and abandoned properties, which includes demolishing the most decrepit of them.

Bank of America

Bank of America tries new approach with foreclosed homes. Image courtesy of Forbes

It’s donating 100 foreclosed homes in the Cleveland area, in conjunction with a local agency which manages such properties, and in certain cases will contribute towards their demolition. Future cities to benefit from this plan include Chicago and Detroit, and it probably won’t stop there, as there are plans to add an additional nine cities by the end of the year. JP Morgan Chase & Co., Wells Fargo & Co., Fannie Mae and Citigroup Inc. are either already carrying out or considering similar programs.

During the first quarter of 2011 the Bank of America had 40,000 foreclosures, leaving it responsible for maintenance costs and taxes, and a massive 1 in 77 properties in the US are currently in some stage of foreclosure according to RealtyTrac Inc. This is holding back recovery as potential buyers are reluctant to buy over concerns that housing values could continue to fall.

The company works closely with lenders, homeowners and government officials to help salvage vacant homes.

uninhabitable home

Most of the homes to be torn down would be those considered uninhabitable. Image courtesy of Swervechurch

Under this latest scheme lenders will have to pay up to $7,500 for demolition, although in areas which are eligible for the federal Neighborhoods Stabilization Program this figure falls to just $3,500. Future uses for the bulldozed space include urban farming and development. Some of the properties most likely to be bulldozed are worth less than $10,000 and are either uninhabitable or would cost too much to renovate.

The current view, which is probably accurate, seems to be that no-one would ever buy these homes, and they are surplus to requirements anyway. The Bank of America cannot cover its losses, but at least by giving them away these losses may be considered to be tax deductible.

 

About Allison Halliday

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.

Comments

  1. This is a good idea. However, action should have been taken while the houses were still in a livable condition. Maybe a year or two ago a family could have used these houses.

    • Mike Wheatley says:

      Yeah, instead they just let them rot until they realized it was costing them money!

      • And, actually, no matter HOW THEY SLICE it, sell it abandon it, let it rot, I guarantee you they have already made plenty of money on each one. It is all the biggest scam our country has ever seen. The banks have made money on each loan from here to the moon and back. Fraud, collusion, racketeering…the list goes on and on.

  2. No question that B of A is not generous, nor giving in the normal sense of the word. But this is very likely the result of their ill-advised takeover of Countrywide Home Mortgage, which was the original lender for many of these properties. The owners in many cases, never existed, as they were fraudulent sales to begin with. Countrywide is the real scammer here. B of A made a terrible decision when they agreed to take over Countrywide to help the government cover up the fact that CW was failing fast in early 2009.

  3. Isabel S - Florida says:

    This is truly disturbing. These homes once belonged to someone. These homes once had memories. Sadly, these homes were likely lost by someone who could no longer keep up with payments for any number of reasons. My problem is this: Why didn’t Bank of America just give it back to the homeowner that once cherished their home instead of bull-dozing it? So where does the “giving” come to play? According to my personal experience with this monster, there might be many reasons and they all involve pure wickedness. I smell a rat!! Bank of America loves torturing homeowners and terrorizes them. It gives them a rush I guess. In addition, Bank of America is possibly covering up something illegal by this little charade. Mark my words, they will get paid for those homes somehow. They are not really charitable and they have alterior motive for everything they do. Hey, the Mafia would also give donations to politicians and charities to continue doing their illegal business.

    These greedy Banksters only care about themselves. They are only worried about not being able to fly their private jets and not being able to pay their billion dollar mansions. They make me sick!! They could care less if you are dying, got an operation, lost your job or any other unexpected inconvenience that might happen in your life. They need to be exterminated like a bad cockroach infestation that has corrupted this country’s economy.

    Has the MAFIA ever cared about who they hurt while they conduct their illegal activities? Of course not! Bank of America and the other Banksters ARE the Mafia right now. They are Financial Terrorists! They are racketeering and no one is doing anything about it.

    Mark my words, Bank of America is a Racketeering Enterprise! Please read my article here: http://www.piggybankblog.com/2010/11/16/bofa-racketeering/

    Bank of America must be held accountable under RICO for Racketeering. Please sign this petition: http://www.change.org/petitions/the-president-of-the-united-states-hold-bank-of-america-accountable-under-rico-laws

    I hope that no one is fooled by this so-called act of generosity. There is no generosity behind their motives, they will get paid, possibly more than we may think, posibly tri-fold.

    • Mike Wheatley says:

      I agree its hardly a charitable action like they are claiming. While they might not get paid for them, the very least they are doing is cutting their losses and avoiding paying for the upkeep of these homes. In a perfect world I guess they should give them back to the old owners, but then that would go against everything BOA stands for!!

      • Actually, in a perfect world, most of these homes would not BE IN FORECLOSURE because the banksters would have had to obey FEDERAL LAWS. People would not have been duped out of their homes in a perfect world. SIGN THE ABOVE PETITION!