Sarasota Real Estate Market News

Is the cure for foreclosure glut a bulldozer?

NEW YORK – Aug. 2, 2011 – Bank of America Corp. is taking an unusual step in chipping away at its high inventory of repossessed homes by demolishing some of the most run-down homes in its inventory.

Bank of America will be donating 100 foreclosed homes in Cleveland, 100 in Detroit, and 150 in Chicago – with nine other cities are expected to be added by the end of the year – to local agencies and contributing to their demolition. Wells Fargo, Citigroup, JPMorgan Chase and Fannie Mae are also moving forward on similar demolition plans for its most decrepit homes.

Banks have faced high inventories of foreclosures in the last few years that have lingered on the market and brought property values nationwide down. In June alone, more than 1.6 million homes – or one in every 77 households – were in some stage of foreclosure, according to RealtyTrac.

“There is way too much supply,” Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., told Bloomberg News. “The best thing we can do to stabilize the market is to get the garbage off.”

The homes slated to be demolished by Bank of America have been deemed uninhabitable, with some of the homes worth less than $10,000. The bank said it would cost too much money to restore the homes. The property’s land will be used for development, open space or urban farming, according to a company statement.

In the first quarter of this year, Bank of America boasted 40,000 foreclosures on its books.

Source: “BofA Donates Then Demolishes Houses to Cut Glut of Foreclosures,” Bloomberg.com (July 27, 2011)

August 20, 2011 - Posted by | News related to Short Sales and Foreclosures, News related to the Market

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