Too Late for Government Foreclosures Program

by Peter Vernon on Foreclosure Crisis

About one third of all foreclosed homes across the nation are too damaged to be saved by various government bank foreclosures programs, according to Thomas Popik, a real estate analyst and partner at Washington-based Campbell Communications, a service that provides real estate data to mortgage industry consultants.

Popik said state and federal government foreclosures programs, such as President Obama’s Making Homes Affordable, cannot save foreclosure properties already destroyed by criminal gangs or by their previous owners. Popik said he based his data on questionnaires he mails every quarter to real estate agents across the country.

Nelson Ortega, the head building code inspector of the city of Nashua in New Hampshire, said there are 29 abandoned foreclosed houses in Nashua which are all in wretched conditions and are not livable. He described fractured foundations, supporting beams with cracks and fissures, broken windows, peeling paint and garbage all around.

Dana Ash, a real estate broker in Atlanta, affirms some of the contentions of Popik. She said she is a little scared whenever she enters many foreclosed homes. She described them as boarded up and full of trash. Many have their walls ripped up and wires dangling in many parts.

Ash however is more optimistic than Popik. She said she is certain the banks will eventually sell the foreclosure properties. Or perhaps some government foreclosures program can remedy the properties.

Popik insisted there are some foreclosure properties too damaged it would not be profitable for banks to retain in their books. He also doubts that any government foreclosure program at present can solve all the problems involving condemned foreclosed properties.

In response to Popik’s assertions, the Mortgage Bankers Association stated some of Popik’s statements are anecdotal and said it had not found evidence of the trend.

A spokesperson from HUD in Washington admitted there are unsalable foreclosed houses, but they represent a small percentage of the total inventory of private lender and government foreclosures nationwide. He said the worse the economic conditions in a neighborhood, the more vandalized foreclosed houses are.

Under the Neighborhood Stabilization Program, state and local government foreclosures programs were allotted billions in funds to rehabilitate abandoned properties in neighborhoods. In 2008, Congress funded NSP with $3.92 billion under the Housing and Economic Recovery Act and in 2009, another $2 billion was added to the NSP fund in the stimulus bill.