FREE House, SAD and DISGRACEFUL !!!

I want to highlight these facts, because I think we all need to be aware of this. I know there might be similar stories out there, but here’s one of them.

This is a story about a house, build in 1978. Not big, only 1008 sq.ft, but big enough for a small family. The house is located in a nice neighborhood. A family moves in. Everything’s going great.

After a few years, the family grew and the house became too small. They move out. Someone else moves in. The people are nice and life goes on.

One day the man lost his job and missed a few payments. The bank sends him a letter. He has to move out. The house became a casualty of the foreclosure process.

Now the house is empty and cold. It goes on the market for only $ 39,900. The economy’s down and lots of people lost there jobs. The house stays empty.

Listing of house still in good shape

Weeks go by, months. It’s raining a lot and the basement‘s damp. No one’s there to help.
Mold starts to creep up the walls.

One day someone came by to mow the weeds, where grass once grew. He peeks through the window.

The next day someone stop by. He has a sign on his car. He must be a realtor. He opened the door for the first time in months.

The shock! Mold everywhere. From the basement to the ceiling.

Now the house is on the market for $ 0.

No-one wants it anymore. It needs to be demolished.

House as it is now

Now I bring this to your attention, because the bank just lost $ 39.900 to mold. If they don’t care about the foreclosed houses and are willing to loose all that money to mold, why not forgive the debt and let someone live in that house. We have enough people that struggle financially.
The banks don’t keep these houses up like the owners did. They cut power to these properties and the basements flood.
Why not let the people stay till they get someone else to live there?

I know I’m just ranting, but it just so wrong!!!

It sucks, yes, but I'm guessing even with having to destroy the house, they still own the land. Land that they hope they will be able to sell and make money off of..... some day.

That doesn't make any commercial sense at all.

So the house goes empty then eventually rots to the ground.
The value drops to nothing but the bank still does not loose out.
The only people that loose out are the evicted owners.

Sounds like the system is geared up for everyone except buisinesses / banks to fail.

I bet the bank didnt have to pay any taxes on the reposessed house when thay had it !

Here in the UK, the local councils build shed load of offices that stay empty for years.
The offices are not really advertised hence no companies fill them.
Why, because they can claim taxes back from the government for empty space.

I wonder if that applies in the USA on foreclosed property.

Hard to believe someone doesn't snap it up just for the land. It wouldn't cost much to get some machines in there, knock down and haul away the house, then there'd just be perfectly good property to sell.

If I lived in the vicinity, I'd do it myself.

It does seem a shame that the little house was wasted by the bank. I bet they'd have come out better if they just let the poor fella who lost his job stay there until he could start paying again. They'd still get their money, just not as fast. But banks don't think like that.

You are right what a waste.. the people that allow these foreclosed properties to slip into disrepair should get their arses kicked... in my neighbourhood a 3 bedroom property with mould like that will still sell for about £170,000 ($280,000)

Heck a builder would get hold of the land and cram 3 rabbit hutches, whoops I mean family homes on it.

Flipped a lot of homes like that 10k$ worth of new drywall and a bunch of bleach back on the market with a hefty profit

Originally posted by Nightfury

I want to highlight these facts, because I think we all need to be aware of this. I know there might be similar stories out there, but here’s one of them.

This is a story about a house, build in 1978. Not big, only 1008 sq.ft, but big enough for a small family. The house is located in a nice neighborhood. A family moves in. Everything’s going great.

Now I bring this to your attention, because the bank just lost $ 39.900 to mold. If they don’t care about the foreclosed houses and are willing to loose all that money to mold, why not forgive the debt and let someone live in that house. We have enough people that struggle financially.
The banks don’t keep these houses up like the owners did. They cut power to these properties and the basements flood.
Why not let the people stay till they get someone else to live there?

That is heartbreaking! Why at the very least didn't they keep electricity on that place?? It was a VERY cute little house. What a shame those people had to move to begin with....

reply to post by mikellmikell


Was thinking of that myself, but the wood beams and everything's covered in mold. Whole place needs to be torn down, basement dug out and replaced.

No-one want to stick 20k-30k to get the land cleared. Now the place will sit there till the city tears it down and maybe then try to sell the land..

Such a waste

reply to post by Nightfury


Frustrating and something that the government could have fixed three years and there would be tens of thousands of folks still in their homes. The government has not only not fixed this, but have made the problem worse.

The government, mostly via FDIC requirements have enforced capital requirements on banks, taking a hard look at their balance sheets and closing down a tremendous amount of small banks who don't meet those requirements. Here is the accounting problem:

A bank has a house that has a $300K loan on it. It used to be worth $450, but now is worth $250. The bank has to list that as a bad debt since the asset the loan is against is worth less than the loan. Now it does not matter if the person in the house has paid for 20 years and never missed a payment, due to Mark to Market rules, that loan, despite the fact that the bank has every reason to believe that the loan will be repaid has to list it as a liability on their balance sheet. The more liabilities, the more capital they need to maintain good standing with the FDIC and the Feds. Small banks simply can not maintain that much capital, they are unable to.

The home owner loses his job. He seeks to restructure his loan to stay in his house. The bank, knowing that the gent is a steady payer going through a difficult period has every incentive to restructure that loan, but in so doing worsens their balance sheet. The bank is forced to foreclose on the house to get the "bad debt" off of its balance sheet. They need to write the house off (and a bunch of other houses) to stay in business.

Now the house is going to fall into disrepair, along with it the neighborhood will become less desirable and the houses in that neighborhood will also lose more value, placing them in the bad debt category as well and the cycle continues.

Talk to a community banker. They don't want to kick these folks out of their houses. They know that they have an asset, that the house's value will increase at some point and that the gent is going to repay his loan. They will even go so far as to give them several years of no payment, tacked on to the end of the loan if they live in and maintain the home. The government will not allow it.

Everyone is all too willing to rail on the bankers, I personally know two gents who work in smaller communities who have cried on many occasions because they were forced to foreclose on people. It is sheer stupidity.

Were the government to remove the mark to market rules and even temporarily relax capital requirements on banks especially smaller banks, a ton of folks would stay in their homes.

What has the government done? Increased the capital requirements in a typical response to problems under the "too big to fail" notion. They apply the same requirements of a small regional bank as they do to JP Morgan who has infinately more flexibility in how they raise cash and meet the balance sheet requirements.

What happens when these regional and community banks go under? The "too big to fail" banks come in and take them over, making that problem worse as well.

None of it makes any sense what so ever and the failure to be reasonable on the part of the government is creating a tragedy one family at a time, one neighborhood at a time.

This problem could be solved in a day with an executive order

reply to post by dolphinfan


Thanks for the great reply dolphin.

You have it right, the local banker is the guy that knows the people and that still trusts his neighbor.
The problem is the big banks... Citi, BoA, Freddie, Fannie etc. They just don't care.

I know of many people that tried to work with the banks to stay in their homes, but in the end had to move because the bank policy said this or that.

I think you summed it up nicely

The government, mostly via FDIC requirements have enforced capital requirements on banks, taking a hard look at their balance sheets and closing down a tremendous amount of small banks who don't meet those requirements.

If they would only relax these requirements it would make a change.

Do you have any idea why they don't?

This problem could be solved in a day with an executive order

If Obama wants to make a real change people can beleife in... he should do THIS!!!

Again, thanks for your informitive reply

Mold is present.

Gee, ya think? It's climbing the walls.

Way to go realtor.

Originally posted by subject x
Hard to believe someone doesn't snap it up just for the land. It wouldn't cost much to get some machines in there, knock down and haul away the house, then there'd just be perfectly good property to sell.

If I lived in the vicinity, I'd do it myself.

It does seem a shame that the little house was wasted by the bank. I bet they'd have come out better if they just let the poor fella who lost his job stay there until he could start paying again. They'd still get their money, just not as fast. But banks don't think like that.

I know, I agree as well. As the OP stated, it was a nice little house, Probably just the right size and price at the time of purchase and sadly the owners fell on hard times. You see all these bank commercials about how the banks "care for their customers" and their customers are "friends". Yeah, friends till you have problems, then you're out the door. Not only did it de-value that house but probably others on the block as well. I honestly don't see how some of these bankers are able to sleep at night.

reply to post by Nightfury


I think there are a number of reasons why they don't change the capital requirements for the banks.

1. They are afraid of getting into another major bank disaster and the current policy is defensive. If there is a problem, they can point to the legislation and claim they did all they could. People losing their homes is far less important to them than their own political skin. In other words, they lack courage.

2. They lack creativity. The government only thinks in one size fits all solutions and this is a problem that requires nuanced solutions - they can't do it. In other words they lack intelligence

3. The big banks love it. This model makes the small banks less competetive which is why so many of them are going under or merging. A large bank has cash flows from many business lines and can meet the capital requirements, when the small bank who is only in lending and deposits can't meeting the capital requirements, the big bank can come in and with the feds help buy up the deposits for pennys on the dollar. In other words, the banks that are corrupting them like the current policy.

I think those are the main three.

This, for once, is not about money, but about the system

Keeping the system intact.

If they would not have had the man leave the house, it would set an example.

It's about keeping the fear and the system alive.


Sad but true.

Don't worry. God is punishing America.

Denying humans the right to live on a piece of dirt on their own planet.....inhumane treatment.