Thousands upon thousands of vacant properties in Miami, throughout South Florida and across the country have become neighborhood eyesores.
But our Miami foreclosure lawyers know you can hardly blame the people who were forced out, when the banks who pushed them are now refusing to complete the process so they won’t be held responsible for the cost of maintenance and taxes.
So in the end, people have lost their homes, banks aren’t making money with a subsequent sale and communities are suffering.
From the bank’s perspective, it would actually cost them more to catch up on the property’s back taxes and correct code violations than it would be to sell the property. So the banks get the judgement to foreclose, but then don’t actually sell the home.
It gets worse.
Because the banks aren’t finishing the foreclosure process, the former homeowner who had been kicked out is still legally being held responsible for any unpaid debt, repairs and taxes on the home – even though they aren’t living there and haven’t been for some time. Many times, former homeowners may have no idea whatsoever that this kind of debt is accruing in their name – until they go to purchase a vehicle or have their credit checked for some other reason.
Not only is this an example of abysmal ethics (not that we expected much from these financial giants), but consumer advocates point out that these institutions are flat-out ignoring guidance from the Federal Reserve indicating that lenders need to be notified when the foreclosure process is abandoned.
Questions of fair lending practices are also being raised because these situations are seeming to arise more frequently in minority and low-income areas.
How big is this problem?
According to RealtyTrac, significant. About 35 percent of the 1 million or so homes in the foreclosure pipeline are vacant with the servicer not having taken back the title.
Three years ago, the Government Accountability office had estimated that there were somewhere between 15,000 and 35,000 abandoned foreclosures. Toady, there are approximately 300,000.
Back when the GAO issued its report, the indication was that this practice wasn’t technically illegal under federal banking law. Therefore, government regulators said they were powerless to do anything about it.
Meanwhile, peoples’ credit scores were being decimated. They couldn’t get back in their homes, but they continue to suffer for it anyway.
So that’s why last year, the Federal Reserve issued guidance mandating notification of borrowers when the foreclosure process is abandoned. At the very least, this would give borrowers the right to occupy the home while the process is in limbo and they’re being forced to pay on taxes and upkeep.
A similar recommendation was handed down by the Office of the Comptroller of the Currency two years ago.
But banks aren’t complying with these rules. Legally, there is no time requirement for them to do so. That means there is nothing to force them to comply – and a heavy hand seems to be what banks require in order to do the right thing.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.
Banks Halting Foreclosures to Avoid Upkeep, April 23, 2013, By Kate Berry, American Banker
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Miami Foreclosure Lawyer Bruce Jacobs a Trusted Authority, April 21, 2013, Miami Foreclosure Lawyer Blog