11/15/2011 11:26 AM ET|
Should we tear down foreclosures?
What happens to the properties after demolition is being left up to the agencies receiving them. The bank will contribute to the cost of demolition or complete the demolitions before donating the properties.
Chicago last year contracted out demolition of 509 properties at a cost of more than $12 million, an average of $23,854 a structure. So far this year, the city has contracted for the demolition of 335 buildings at an average cost of $22,800.
A city ordinance was introduced last month to reduce the time it takes for foreclosure to six months, down from the two years now allowed. The goal is to work with banks to pass statewide legislation to speed up the foreclosure process and return the properties to the market.
Gus Frangos, the president of the Cuyahoga Land Bank in Cleveland, says Ohio has reduced the time it can take to get clear title on a property to 45 days. One key change came in the redemption process, which no longer lets a homeowner pay taxes and other costs at the last minute of a foreclosure and take back the property.
The redemption process had hung over what could be done, Frangos said, delaying loans, permits and the rehabilitation of declining properties.
The 2-year-old Cuyahoga Land Bank, a nonprofit, gets funding from penalties and interest paid on delinquent property taxes. It has demolished 500 homes, has 1,000 in its inventory and has disposed of an additional 1,500 properties by turning them over to neighbors or churches, or to contractors to rehabilitate. Frangos estimated there are 15,000 homes in Ohio's Cuyahoga County that could be considered for demolition.
There's plenty of help to do the demolition work, but Frangos said what his group does is "not a wonderful job program that will last forever."
"Demolitions were a couple of hundred a year and now could be more than a thousand," he said, "so there has been some increase in employment." But he considers demolition regressive spending, as opposed to building something that would continue to produce work.
Foreclosures' cost to families
The Center for Responsible Lending estimated that foreclosures in 2009 would cause 69.5 million nearby homes to fall in value an average of $7,200 each, for a total loss of $502 billion. The center projected that from 2009 to 2012, about 92 million U.S. families would lose an average of $20,300 in home value -- about $1.9 trillion in all -- all because of nearby foreclosures.
The center said its projections represent only property value declines caused by nearby foreclosures, not price drops associated with short sales or the slowdown in local housing markets. The projections are based on data from Credit Suisse, Moody's Economy.com and the Mortgage Bankers Association.
The Center for Responsible Lending was founded in 2002 by the Self-Help Credit Union, a nonprofit community-development lender, and is supported by several charitable foundations. Its goal is to protect "homeownership and family wealth by working to eliminate abusive financial practices."
Not everyone is 100% behind the idea of demolishing foreclosed homes.
"Demolition is not ideal," said Julie Dworkin, the director of policy at the Chicago Coalition for the Homeless. "It's preferable to rehab homes and get people back into them."
To that end, Dworkin said, the banks could do two things: make it easier to buy foreclosed homes and donate properties that are still in good shape.
Those views are echoed in Cleveland, where Brian Davis, the director of community organizing with the Northeast Ohio Coalition for the Homeless, said homes should be donated when they first come on the market. "After six to eight months, they have been stripped and aren't worth saving," he said.
Davis acknowledged that neighbors want blighted homes taken down, "but having someone staying in the home, keeping criminals away and trying to improve it would not be a bad thing."
He would like to see a program where homes could be saved in exchange for sweat equity by homeless people. His organization's plan would be to have teams of four with various skills work on the homes, with a team member moving in when it was finished. The team would continue to work until all four members had homes.
VIDEO ON MSN MONEY
Todays housing prices were artificially driven up by the big money boys. Sure, they would agree with destroying the houses. They destroyed the whole Country for greed.
Join hands with those in need and re-build our Country.
You can buy a house in Flint for like 4 grand. They aren't tearing those down; therefore, perfectly good houses shouldn't either. When stuff doesn't sell, you LOWER the price until it does sell. Holy crap, how hard is that? If its torn down, it isn't worth anything!
The housing market has been artificially inflated for years. The manipulation of housing prices is what destroyed the market.
The prices should be lowered until the sells. This can give those who are suffering financially a chance to own their own homes. Our Countrys economy is headed south. Every family should be given the choice to own property, and live in their own home.
The idea of someone suggesting that we destroy a home because of someones having a hard time financially is sick.
Not only should people struggling financially be given a chance to own their own home, the Government should assure that there is financing available. We need to help each other. What have you done lately to help someone make their bills.
We need to start working on the repair of the Family as a unit. Our whole value system is falling apart.
Repair and rebuild the Country.
I can not believe that we, as a Modern, Compassionate People here in the United States are more Satisfied by taking our fellow mans homes by foreclosure and then TEARING said home down! Leaving these people on the streets, helpless and homeless. The people foreclosing on these homes are financed by MY and YOUR tax dollars to be able to kick the same TAX payers out of their homes and tearing them down, helplessly watching their dream and lives crumble before them. WHAT IS OUR COUNTRY COMING TO?? GREED, that is WHAT!!
I am ashamed to be a part of such a system that has absolutely NO Compassion an so much greed for the almighty dollar. Since tearing down the home would be deleting all the assets, LET THEM STAY THERE AND TRY? What would you have to loose?
This article speaks volumes about American values. Let's go into two unproked wars, spend 2 milion dollars a minute and when the economic fall out happens tear down homes and throw people out on the street because banks are losing money. Animals are more humane to one another than humans are in this so called "civil society".
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
MSN REAL ESTATE
Banks often use sign-up bonuses as a way to get new customers to apply for one of their cards. But are you guaranteed to earn the bonus?
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'