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Bank Walk-Away II: Fish or Cut Bait in Durham

Adam Rust's picture

Posted September 28, 2012

One block from my office, a property has been in limbo for four years. The home was foreclosed upon and then subsequently abandoned.

The home had originally been purchased by a buyer that wanted to rent the home.  He apparently gave up

on that plan. This home is in North East Central Durham. He lives in Rocky Mount, North Carolina.

There is a notice posted on a board nailed to the frame of the doorway:

"This property has been determined to be vacant and abandoned. This information will be reported to the mortgage service responsible for maintaining the property. The mortgage servicer intends to protect this property from deterioration. The property may have its locks replaced and/or plumbing systems winterized in the next few days. If the property is not VACANT and ABANDONED (caps as written in the notice), please call BAC Field Services immediately."

MERS says that the property was serviced by Litton from 2003 to 2007. Now it is with Specialized Loan Servicing. BAC Field Services is a contractor. They do the physical management of these types of properties.

The borrower of this property stopped making payments on this home four years ago. The lender has foreclosed, but has not sold the property.

The future is not bright for this home or for neighbors looking forward to a time when this nuisance has been resolved.

It could take so long because things are so rough in the immediate area surrounding the house. In this neighborhood scores of homes have been sold out of foreclosure for between $10,000 and $20,000. The corner store on the same block has been a source of trouble for some time. Recently, a thief brought a stolen television to the shop owner, presumably with the expectation he would buy it for cash.

It is a community whose legacy is intertwined with that of its former lenders: Washington Mutual, Ameriquest, Long Beach, and Countrywide all made loans here in the middle of the last decade.

With the presence of non-profit community development institutions, some of the homes are being turned around. Recently a bank sold three homes for $25,000. The three properties sat on two contiguous plots. As a result, one was demolished. Two will be rehabilitated and sold to low-or-moderate income home buyers.

Back to the AG Settlement

On October 2nd, the AG settlement will put fire under those big five to do something. It is the "fish or cut bait" moment.

But while the AG settlement deserves credit to have a provision for walk-aways, it still faces a problem of its scope. As I said yesterday, it will only cover cases concerning the Big Five, and only when those entities are in the role of owner of the loan and servicer.

The AG settlement will not get this property out of limbo.