by Jeff Davis

Looks like the housing market hasn’t merely crashed; it is beginning to implode inward on itself. Realtors have coined a new term “Jingle Mail” for all the keys that are mailed back to them when people can’t afford the crushing mortgage payments as their jobs disappear and small businesses fail.

The Dayton Daily News reports: “Not only are there no bids in some markets, the accumulation of property taxes means that some properties have negative valuations, like a derivative trade that’s gone bad. Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they can’t be identified in searches of public real estate and court data without individually pulling case files, experts say. But nobody questions that they are on the increase. David Rothstein, a researcher with Policy Matters Ohio, summarized the way they occur like this:

* The lender files a foreclosure, gets the foreclosure judgment in court, takes the property to sheriff’s auction but doesn’t bid on it if no one else does.

* The lender files as above, gets the judgment, sets the sheriff’s auction, then cancels the sale at the last minute.

* The lender files as above but then never requests a sheriff’s auction.

* The lender doesn’t even bother to file foreclosure.

“All of these actions leave the foreclosed property in the hands of the original owner who, in many cases, has moved out and is unaware the lender hasn’t taken it.”

The logic in not foreclosing the property after the home buyer misses three (or a lot more) payments is that the property taxes will continue to be sent to the “owner”. Assuming the houses have been trashed, the banks won’t be able to rent out the homes (unless they do expensive repairs which would require years of renting out to recover that cost). Banks usually don’t want to go into the slumlord business. It’s bad business to assume ownership (and responsibility) for each foreclosed home. If you multiply hundreds of foreclosed properties times several thousand dollars per year in taxes, that can be a pretty painful burden for a bank which is already near failing.

The article notes “One indicator of the trend in walkaways is the gap between the number of foreclosure filings by lenders and the number of properties actually sold at sheriff’s auction. A Dayton Daily News analysis of Montgomery County records found that, through September, foreclosure filings are on a pace this year to decrease by 8 percent. Meanwhile, foreclosed properties sold at sheriff’s sale will be down more than 21 percent. Over the three years an average of 2,500 foreclosure filings have not made it to sale at auction. A foreclosure filing may not make it to auction for a number of reasons, including owners coming up with the money or lenders working out deals with them. But, Rothstein said, the growing difference between filings and sales suggests walkaways are playing an increasing role. ‘When we look at the numbers, it’s not like thousands of people are getting loan modifications that would lift them out of the foreclosure process,’ he said. ‘So what’s happening to those other properties?’”

Of course, many of the sub-prime properties were sold to blacks and Latinos, so in addition to owning a house they now cannot unload, the bank is also responsible for property taxes and repairs on a building that has in almost every case been trashed. Imagine holes smashed in the walls, the plumbing and wiring ripped out and any copper sold for drug or wine money and wall-to-wall cockroaches left behind as a memento of Diversity. Houses vacated by blacks and Mexicans are usually unfit for human habitation, never mind immediate re-sale. This explains why the banks don’t try to rent out the properties. If they can only collect one to two thousand per month, they aren’t going to spend $50,000 they can ill afford to fix the place up. And then there’s the problem of dealing with flaky tenants, which is what you often get if the house is in a black or Latino neighborhood. Most banks don’t want to get involved with the slumlord business.

ACORN has been encouraging minorities to keep living in their houses even after they stop making mortgage payments. Apparently the “gubmint” owes them all a house at White taxpayers’ expense.

Virtually all of these foreclosure problems were caused by liberal polices and the inherent nature of blacks and Latinos. A house in a White neighborhood would still have value. A house that White people lived in can be rented out again with relatively little cleaning and few if any repairs. Most White people make a 20 percent down payment, which keeps them from deserting a mortgage if the house drops 19 percent in value. A federal court ruled that it was “racist” to force minorities to make down payments on a house since most minorities never save up any money. The minority subrpime loans did not have down payments, putting all the risk on the bank if the house price suddenly dropped and the new “owner” didn’t feel like paying off a $600k price for a $500k home.

Unfortunately, White people will likely wind up getting stuck with the cost of all these bank failures imposed on them as part of the national debt.