The redistribution of wealth continues. Foreclosing on people who at one time were making payments, but stopped because of job loss due to the economy, is going to come back and bite us all in the backside.
These homes are taking huge drops in value- and while the “capitalists” among us say that’s a market adjustment, I call Bull Hockey. Instead of modifying loans, we’re seeing drops in comps, and a game of roulette- where new home buyers may be in the same position in a few short years if the markets aren’t stabilized.
Reading the article in today’s Dayton Daily News- it seems government is worried more about the homes than the displaced people problems. People pay taxes- not the homes. The banks no longer have a stake in the community, with both their jumbo size- and their bailouts by the US Government.
The need is there. Montgomery County alone is estimated to have 36,000 vacant housing units, which puts the residential vacancy rate at more than 14 percent.
A real estate market with a 5 percent vacancy rate is considered to be in balance, said Doug Harnish, president of Gem Public Sector Services. To make matters worse, a recent study Harnish conducted for local governments predicts that the number of vacant and abandoned homes will swell to 48,000 by 2013.
“In eight years, we’ve gone from 19,000 to 36,000 (vacancies) and in another five we’ll go from 36,000 to 48,000 unless we do something to stem that tide,” Harnish said.
The priority shouldn’t be on saving the “abandoned properties”- we need to save the people first. It’s time to start charging impact fees to banks that foreclose without attempting loan modifications, and making them responsible to the community as well as to their shareholders, for the difference between the “loan value” and the foreclosed value. Only then will we stem the erosion of our property values and our community values at the same time.