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Follow the Money – Halloween Debts Decorations Foreclosures

October 15, 2014

Halloween spending expected to hit $7.4 billion” By Lauren Cappuccio:

According to the National Retail Foundation’s annual Halloween Consumer Spending Survey, which polled 6,322 consumers, more than $7.4 billion will be spent with more than two-thirds, or 67.4 percent, saying they will buy a Halloween costume this year. The average person is expected to spend $77.52 this year on the holiday, compared to $75.03 last year, according to the survey.

Aside from costumes, it’s also decorations and that can lead to some community land use and free speech issues, see MyFoxPhilly about a house in Minnesota: “Halloween Decorations Cause Controversy In Minneapolis Neighborhood“:

Neighbor Monica Paquette is worried about the children in the community.

With no city ordinances banning the frightening Halloween props, the owners can keep their bloody decorations on display.

Speaking of zombie houses… FORECLOSURES see this Reuters story at The Fiscal Times: “The Foreclosure Nightmare That Won’t Go Away“, and at CNBC: “Americans face post-foreclosure hell as wages garnished, assets seized“:

Using a legal tool known as a “deficiency judgment,” lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come.

DSNews: “Zombie Foreclosures Result in Millions of Delinquent Tax Revenue Dollars” by Brian Honea:

zombie foreclosures, which are properties that have been deserted by their owners but are not yet owned by banks, so they sit in limbo.

Main Street: “Zombie Foreclosures Are Haunting Towns Across the United States” by Robert McGarvey:

Zombies suck the life out of nearby real estate.

Zombie foreclosures happen when a lender goes through all the steps of a foreclosure except for the last which is registering the deed that moves title from the borrower to the lender.
..
A zombie home is an eyesore, usually.

A zombie home is ugly, usually it’s a health hazard, and it may also be a fire trap.

the former owner long since fled the scene of a zombie home and even if he lives across town, typically he doesn’t have the money to repay the city.

So cash-strapped cities sit on their hands and watch zombie homes rot.

banks see no percentage in taking ownership of a home that needs repairs to be up to code and that will likely languish on the market for months, even years, meaning there will be thousands of dollars spent on upkeep. Even New York City has zombies. RealtyTrac numbers show 3,700 zombies in Queens and Long Island.

But we need to clarify this terminology. Zombie foreclosures are NOT always abandoned or blighted property. Abandoned homes are part of the problem for sure, and yes many homes were abandoned because the foreclosure crisis but some owners are still trying to negotiate with their bank. We have two separate (but related) problems, there are foreclosures and there are abandoned homes. And then a third issue we have blighted property but there are already ways for towns to seize or condemn blight using eminent domain. Abandoned homes present a set of problems that are not entirely the same as blight and could be prevented from going that far if steps could be taken earlier. But foreclosures is it’s own problem.

We need ways to force the banks to negotiate with the owners. Instead, the media’s zombie rhetoric is designed to make us think all these limbo foreclosures are blighted property and to blame the slow foreclosure process instead of the stubborn banks. The banks caused the crisis by using collateralized debt to fuel an illusory market. When their insurance-reinsurance schemes failed, we bailed them out with tax dollars. So why aren’t they passing that money to provide principle reductions on the non-performing loans? Reposition the owners so that they can afford to re-occupy and maintain their home or at least sell the home at a marketable price. The goal must be to put the assets back into the hands of the pre-crisis homeowners, not to help the banks foreclose faster.

It is tempting for struggling towns to want to help banks foreclose faster so that they can then charge the banks for the taxes and property maintenance. But this might have the possible effect of doubling down on the injustice against some of these homeowners. The banks were part of a conspiracy to defraud. There are people who want their homes back if the banks would negotiate. Unfortunately, the banks are not negotiating from the perspective of helping people who were hurt by the banks’ own actions, they are negotiating as if it’s just a regular refinance. That might be fair lending in ordinary circumstances but it’s unfair because it ignores the history. It ignores the banks own role in forcing these homeowners into default in the first place.

Let us never forget that economics is war. See in The Guardian: “What kind of ‘war games’ is George Osborne playing in Washington?“:

like a zombie survival thing? No, … It’s a multiplayer simulation of a transatlantic bank crisis.

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From → debts, economics, money

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