"From a NYC reader via e-mail:
Put more simply, if you are seeing a significant overhang of unsold, and perhaps more important, unsellable, houses in two relatively well off counties in New York, it’s likely that the same problem exists elsewhere.
We noted last October that Bank of America was now eating title insurance liability on foreclosed properties sold by its servicer. Perhaps BofA has since reversed course, but it may be that other major servicers have not followed suit. We’ve also been told by real estate attorneys of title insurers offering policies for foreclosed properties with significant carveouts, making them more or less useless for the buyer.
One of the notions you often hear voiced is that the residential real estate market won’t recover until it “clears”. That belief is then used to argue for faster foreclosures, when foreclosures are certain to result in lower prices than modifications (to the extent that borrowers have enough income to be viable with a deep mod; there is no point in trying to rescue those beyond salvation). But whatever form of “let’s get this over with” you believe in, whether the Mellonite “liquidate homeowners” or a mix of foreclosures and mortgage mods, the tacit assumption is that the foreclosed homes will be sold in an orderly manner (or in cases where communities have shrunken, razed).
But what happens when you have unsellable homes, becoming havens for squatters or targets for vandals? They not only pull down the values of properties nearby, but they also represent a safety risk.
To put it bluntly: vacant homes are crackhouse futures..."
at http://www.nakedcapitalism.com/2011/08/another-real-estate-time-bomb-unsellable-vacant-homes.html
My good friend is a real estate broker in Westchester/Dutchess County. He said he is seeing a real problem growing with title insurance. He said a large number of the REO properties banks try to get him to sell cannot close because of title problems. He’s worried about the growing number of vacant homes which may be impossible to sell.For those who don’t know the New York area, Westchester County is full of wealthy bedroom communities like Scarsdale; Dutchess County is further out but well off by national standards. The unemployment rate for the state is better than the national average, and with New York famously having the longest foreclosure clearing time in the US (as in the number of defaulted homes versus throughput rates in the courts), the state is not a prime candidate for a huge inventory of unsold homes.
Put more simply, if you are seeing a significant overhang of unsold, and perhaps more important, unsellable, houses in two relatively well off counties in New York, it’s likely that the same problem exists elsewhere.
We noted last October that Bank of America was now eating title insurance liability on foreclosed properties sold by its servicer. Perhaps BofA has since reversed course, but it may be that other major servicers have not followed suit. We’ve also been told by real estate attorneys of title insurers offering policies for foreclosed properties with significant carveouts, making them more or less useless for the buyer.
One of the notions you often hear voiced is that the residential real estate market won’t recover until it “clears”. That belief is then used to argue for faster foreclosures, when foreclosures are certain to result in lower prices than modifications (to the extent that borrowers have enough income to be viable with a deep mod; there is no point in trying to rescue those beyond salvation). But whatever form of “let’s get this over with” you believe in, whether the Mellonite “liquidate homeowners” or a mix of foreclosures and mortgage mods, the tacit assumption is that the foreclosed homes will be sold in an orderly manner (or in cases where communities have shrunken, razed).
But what happens when you have unsellable homes, becoming havens for squatters or targets for vandals? They not only pull down the values of properties nearby, but they also represent a safety risk.
To put it bluntly: vacant homes are crackhouse futures..."
at http://www.nakedcapitalism.com/2011/08/another-real-estate-time-bomb-unsellable-vacant-homes.html
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