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Business & Economy
Fri November 9, 2012
Fighting Bank Walk-Aways In Durham
There are neighborhoods in many urban areas across the country with empty, dilapidated houses. Chances are the down economy got the best of the owner resulting in foreclosure. But in thousands of cases foreclosures have gone wrong like at a house on East Geer (gear) Street in Durham. For years no one took responsibility for the defaulted mortgage. That means, the foreclosure was not completed, the structure could not be sold, resulting in blight. It’s called a “bank walk away.”
So you ask what is a Bank Walk Away? It’s pretty much when a mortgage lender decides NOT to foreclose on a property or, in the case of 212 East Geer Street in Old North Durham to STALL on the completion of a foreclosure. You see it doesn’t make the bank any money to foreclose in these mostly minority, lower to middle income neighborhoods where the housing stock is old. The proceeds from the foreclosure won’t even cover the cost of the process itself. So there the house sits right next door to Frank Burgess.
Frank Burgess: "There were tenants here, but they weren’t the nicest, they weren’t the cleanest, because they would put the baby pampers, toss them right over the railing, they would toss them out the back door, on our side of the property of course."
Frank Burgess says his wife just had to have the house at 214 East Geer Street. So since 2008 he’s personally cleaned up the trash.
Frank Burgess: "Months, because I cleaner, I don’t know how many trash bags full of just baby pampers."
And Burgess says the police have had to be called several times because of loitering at the house by drug dealers and prostitutes. 212 East Geer was purchased by Arthur Barnes in 2006 with financing from Countrywide Mortgage Corporation. Barnes allegedly owned many rental properties in Durham. But due to the housing bubble, coupled with a few bad tenants, Barnes filed for bankruptcy and stopped making payments on East Geer. Then banks started passing the buck, Countrywide ended up being purchased by Bank of America. It hired a company to be the sub-servicer, and that company is owned by an outfit in Japan.
Peter Skillern: " The full story is, JC Flowers a Hedge Fund, owns Shinsei Bank, which owns Specialized Lending Services which is hired by Bank of America to do the foreclosure and no one has done their job."
Peter Skillern is Executive Director of Reinvestment Partners an Economic Justice advocacy organization that works on fair lending and banking issues. Skillern’s offices are one block from the property in question and he says he doesn’t like seeing the drug dealers, trash and loitering either.
Peter Skillern: "We’ve made every effort to communicate with each of the banks. It’s taken quite a bit of work."
Bank of America didn’t respond to a request for an interview, but Skillern has made some headway. After four years, he says Bank of America has informally agreed to help Reinvestment Partners buy the house and re-hab it. A lot of work for just one little house. Rick Hester is the Housing Code Administrator for the city of Durham. He says “bank walk aways” also known as “abandoned foreclosures” are a problem.
Rick Hester: "I do know that we probably run across two or three a week. The name is still in the old owner, but we know the bankruptcy has been filed they just haven’t closed on it."
Inge: "How serious of a problem do you think this is for the city? I guess you’re about trying, if they’re foreclosed on you want to get them cleaned up and moved, as you say."
Hester: "Exactly. We want to get them in the hands of people that’ll fix them. In order to do that, got to figure out who actually owns it."
A 2010 report from the US Government Accountability Office says there are as many as 38-thousand Bank Walk Aways in America. The cities with the largest number of “walk aways” are Detroit and Chicago.