Consumer Law

Bank Walkaways

By Alan White

The Woodstock Institute in Chicago has issued a report carefully documenting the ownership status of the vacant properties in Chicago.  About 15% are bank-owned homes after foreclosure, and another 10% are apparent walkaways, cases where a foreclosure was initiated but has not been pursued.  Nearly three quarters of these "red flag" properties are in African-American neighborhoods.  

The GAO report on bank walkaways concludes that the nationwide total is relatively small, fewer than 50,000 of the millions of homes in foreclosure, but recognized that walkaways are concentrated in certain cities that are especially hard hit.  While walkaways may be a small portion of foreclosed homes, they can be a large contributor to vacancy and abandonment, imposing significant external costs on cities that at present are not in the best position to absorb these costs.  Professor Kathleen Engel's paper suggests that cities may have legal standing to pursue lenders to recover these costs, and the City of Buffalo, at least, is pursuing a bevy of banks on that theory.

Full post as published by CL&P Blog on January 27, 2011 (boomark / email).