Ohio Lawmaker Calls For GAO Probe Of Lender Practice Of Initiating, Then Abandoning, Foreclosure Actions, Leaving Vacant Homes In Legal Limbo

From the Office of U.S. Senator Sherrod Brown (D-Ohio):

• A growing number of lenders are refusing to take possession of homes after they have been foreclosed, leading to vandalism and neighborhood decline in Cleveland and cities across Ohio. In response to this alarming trend, U.S. Sen. Sherrod Brown (D-OH) called for a federal investigation of so-called “bank walkaways.”(1)

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• In a typical foreclosure, the lender assumes responsibility for the property once the foreclosure proceedings have been completed. The property is then put up for auction, [...]. In the event that no one meets the opening bid, the lender takes over the title of the home and tries to resell it. Because the lender owns the property, it has an interest in maintaining the home’s condition and dealing with tax liens.

• In a rising number of cases across Ohio, however, lenders are refusing to take possession of foreclosed homes – leading to properties that are neither being sold at auction nor maintained by the lender. The result is an increase in vandalism and a decline in property values in the area surrounding the abandoned home. And foreclosed homeowners – who have been forced to leave their homes – are left with back taxes and housing code violations for homes at which they no longer live.

For Senator Brown's entire press release, see Brown Points to Rising Occurrence in Ohio of Lenders Refusing to Take Possession of Foreclosed Homes, Leading to Vandalism, Neighborhood Decline.

(1) “I am concerned that bank walkaways are exacerbating the problems that homeowners are already facing as a result of the foreclosure crisis,” Brown wrote in a letter to the Government Accountability Office (GAO) requesting an investigation of the practice. “I am also concerned that bank walkaways could complicate government efforts to help stabilize distressed neighborhoods through the acquisition, rehabilitation, and resale of foreclosed properties.”