are toxic assets covered by TARP if no forecloser is filed? Is that what is going on here? the banks don't care because their loss is covered by the taxpayers? surely these assets, regardless of how badly they are devalued at the moment, are "worth pursuing".
Drop in foreclosures called ‘very scary’Lenders’ actions show they think properties are not worth pursuing.Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they can’t 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 sheriff’s auction but doesn’t bid on it if no one else does.
• The lender files as above, gets the judgment, sets the sheriff’s auction, then cancels the sale at the last minute.
• The lender files as above but then never requests a sheriff’s auction.
• The lender doesn’t 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 hasn’t 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 sheriff’s 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 sheriff’s 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.
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