Have you ever cruised through a neighborhood and come across a dilapidated house that’s stinking up the whole street? It’s probably waiting to be foreclosed on. The problem is, many times, the process of foreclosure can cost more than the property is worth — so the mortgage lender just walks away.
It’s called a “Bank Walk Away.” But why would a bank just walk away from a foreclosure? It usually happens in working-class neighborhoods with old housing stock that’s not worth a lot of money. Because the banks actually lose money on the foreclosure, it’s cheaper to do nothing.
That was the situation at 212 East Geer Street in Durham. The walk away property sat right next door to Frank Burgess.
“There were tenants here, but they weren’t the nicest, or the cleanest,” Burgess says. “Because they would put the baby pampers, toss them right over the railing, cause I cleaned, I don’t know how many trash bags of just, baby pampers.”
Burgess is a city bus driver. It took him and his wife a while to settle on their dream home on East Geer. But that was soon followed by bad neighbors and bad loitering.
“All of the drug activity, prostitution, the alcohol,” Burgess recalls. “It was daunting, me and my wife, we just felt like, it’s our home, we’re staying in it.”
Records show the East Geer property was purchased seven years ago with financing from Countrywide Mortgage Corporation. A couple of years later, the owner filed for bankruptcy and stopped making payments. The property soon became Bank of America’s responsibility.
Peter Skillern runs a nonprofit called Reinvestment Partners that just happens to be one block from the problem house on East Geer Street.
As Skillern puts it, “We’ve made every effort to communicate with each of the banks. It’s taken quite a bit of work.”
Reinvesetment Partners was finally able to buy the house a few weeks ago It cost $27,000 at a foreclosure sale, that’s about a third of what the old owner paid in 2006.
“We spoke to the Consumer Financial Protection Bureau, the N.C. Attorney General’s office. We filed a local complaint at the court,” Skillern says. “We’re very pleased that Bank of America finally did respond and we have been able to resolve the issue. But it was an example of the extraordinary efforts it takes to resolve these problems.”
East Geer is now a success story. But the latest General Accounting Office report says there are 38,000 bank walk aways across the U.S. People on the ground say that estimate is on the low side.
Rick Hester sees this first hand as the housing code administrator for the city of Durham.
“I do know that we probably run across two or three a week,” Hester says. “The name is still in the old owner, but we know the bankruptcy has been filed they just haven’t closed on it.”
Hester wants to get these houses in the hands of people who’ll fix them up and get them back on the tax rolls. He says it’s about finding good neighbors for hard-working people like Frank Burgess.
“I’m a city bus driver so a lot of people in the town know me from driving the bus. They’re like, ‘Bus driver what are you doing here?’ But, I love the house, I love where it is and we’re not going to let anyone run us off from it.”
Burgess says he doesn’t plan on going anywhere soon.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.