http://www.daytondailynews.com/news/dayton-news/drop-in-foreclosures-called-very-scary-352689.html Lendersâ actions show they think properties are not worth pursuing. By Ken McCall, Staff Writer 9:00 PM Saturday, October 17, 2009 Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they canât 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 sheriffâs auction but doesnât bid on it if no one else does. ⢠The lender files as above, gets the judgment, sets the sheriffâs auction, then cancels the sale at the last minute. ⢠The lender files as above but then never requests a sheriffâs auction. ⢠The lender doesnât 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 hasnât taken it. 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 sheriffâs 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 sheriffâs 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. âWhen we look at the numbers, itâs not like thousands of people are getting loan modifications that would lift them out of the foreclosure process,â he said. âSo whatâs happening to those other properties?â Another indicator is the falling number of properties that banks are repossessing, said Daren Blomquist, a spokesman for RealtyTrac, Inc. Data from RealtyTrac shows that bank repossessions, called REOs, have been steadily declining in Montgomery County over the last three years. The 2009 monthly average for repossessions is only 43 percent of what it was in 2007, a newspaper analysis of the data show. âThereâs something happening once the properties enter foreclosure that is at the very least slowing down the process,â Blomquist said. âMaybe not to that (Montgomery Countyâs) extreme, but weâre seeing a similar pattern nationwide.â Another indicator is the number of canceled sheriffâs sales, said Chuck Rodersheimer, a Dayton attorney who specializes in bankruptcy and foreclosure cases. ZIP codes like 45405 and 45406 northwest of downtown Dayton illustrate the problem, he said. A newspaper analysis of sheriffâs sale data found that 45406 had 721 cancellations since 2006, by far the most of any county ZIP code. The 45405 ZIP was second with 594 cancellations. Some of those neighborhoods have a lot of old, deteriorating housing stock, many of which are for sale or vacant, and accumulating unpaid taxes. The cost to the bank for taking responsibility for those properties, he said, is going to far outstrip anything they could hope to get out of selling the homes. The sheriffâs sale cancellations in those neighborhoods, Rodersheimer said, are unlikely to be a result of negotiations between the owner and lender. âItâs going to be the fact that the bank didnât want the property any more.â In some instances, lenders donât even bother to file a foreclosure. Figures by RealtyTrac released this week show foreclosure filings in the greater Dayton area are down almost 21 percent. John Carter, housing inspector with the city of Dayton, finds the decline in foreclosures âvery scary,â because houses are continuing to go vacant. For every 100 houses that he orders boarded up, he said, 40 to 50 properties have a mortgage but no foreclosure filed. When he contacts the banks, they sometimes tell him they have no plans to foreclose. âThat makes it look like the foreclosure numbers are going down, but in actuality the banks are not even starting foreclosure,â Carter said. âSo thereâs no number to track now.â
and how about because some of the properties are so dilapidated, that there's no feasible worth to foreclose on them without taking a serious bath? Then you just let it sit there and maybe the city/town will eventually seize it instead...