This article gives some insight:
97-year-old house at Virginia Avenue and South 32nd Street in Parkland has languished for years, with its overgrown grass and a piece of metal drip edge hanging over the porch.Last April, Louisville Metro Government employees made an “emergency” visit to board up the house because “people have been going in and out stealing copper and hanging out.”
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A month later, metro officials filed criminal charges against the property owner, Dartanya Hill — a move reserved for only the most negligent property owners.
But while he remains the house’s legal owner, Hill contends that he “surrendered” the $42,910 one-story home and three other western Louisville rental properties in 2007 when he went through bankruptcy.
Now he is suing Bank of America, U.S. Bank and Wells Fargo, claiming the mortgage creditors have left him in “legal limbo” by keeping their liens on the dilapidated houses but also refusing to take title — and thus legal responsibility — for them.
Sweet. The banks write mortgages that at bottom say: 'Make your payments, or we'll seize the property.' This owner went through bankruptcy, and voluntarily surrendered the banks' property back to them. They refused to take them back, and also refused to release the lien. In other words, they know the properties are deep under water, that they were never worth the money lent on them. They now refuse to have them on the books, and simultaneously insist that the debtor still owes the full amount of the remaining mortgage. The taxes have piled up as well in the meantime, but the city doesn't wish to seize them either.
So the houses sit and rot, attract vermin vagrants and criminals, and serve to pull the neighborhood down into the black hole with them. Whose gunna lend money on the house next door to one of these houses, or down the block for that matter?
After all that money was shoved at the banks via TARP, the Fed, and the FDIC to save them from themselves, we have this mess on our hands.
Mr. Hill's former houses are part of that large 'shadow inventory', in legal and financial limbo. Until someone begins telling the truth, and takes the initiative to clean up this mess, this problem only gets worse.
OS nominates the banks for the role. They lent the money, it's their risk.
Not ours.
