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Analysis posted Aug 01 2011, 11:19 PM Category: Economy Source: InformationLiberation Print

Government Paying Banks to Bulldoze Perfectly Fine Homes

Chris | InformationLiberation

The government is spending taxpayer's money to help banks get rid of their unwanted homes, only to then have the homes demolished in order to keep housing prices unaffordably high.

From Bulldoze: The New Way To Foreclose in TIME Magazine:
Banks have a new remedy to America's ailing housing market: Bulldozers.

There are nearly 1.7 million homes in the U.S. in some state of foreclosure. Banks already own some of these homes and will soon have repossessed many more. Many housing economists worry that near constant stream of home sales from banks could keep housing prices down for years to come. But what if some of those homes never hit the market.

Increasingly, it appears banks are turning to demolition teams instead of realtors to rid them of their least valuable repossessed homes. Last month, Bank of America announced plans to demolish 100 foreclosed homes in the Cleveland area. The land is then going to be donated back to the local government authorities. BofA says the recent donations in Cleveland are part of a larger plan to rid itself of its least saleable properties, many of which, according to a company spokesperson, are worth less than $10,000. BofA has already donated 100 homes in Detroit and 150 in Chicago, and may add as many as nine more cities by the end of the year.

And BofA is not alone. A number of banks are ramping up their efforts not just to rid themselves of their unwanted homes, but to fully dispose of them. Fannie Mae has a program to sell houses to local municipalities for around a few hundred dollars. Wells Fargo has donated 800 homes to be demolished since 2009. JPMorgan Chase says it was one of the first banks to begin donating houses it couldn't sell, or didn't think were repairable. Since 2008, the JPMorgan has donated or sold at a discount 1,900 houses to city or county officials. [Emphasis added]
This is the equivalent of the cash for clunkers scam, but for homes instead of cars.
The banks do the deals because once the properties are donated they no longer have to pay taxes or for upkeep. Tax experts say the banks may also be able to get a write off for the donation. That appears to be a better deal than trying to repair some of these homes, which according to a BofA spokesperson are more economical to demolish than fix up. The local governments like these deals because they get free land to develop or use for open space. [The land is not "free" if the government is paying them for it. - InfoLib] Cleveland-based Cuyahoga County Land Reuntilization Corp., which inked the deal with BofA, has been one of the most aggressive local government organizations in striking these deals. Housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all, dragging down home prices in general. An oversupply of homes on the market has been once of the big problems plaguing real estate. At the end of June, it would take nine and a half months for the current number of homes on the market to sell. The housing market is considered healthy when supply equals six months of sales. So taking some of these homes off the market for good could remove some of the inventory drag. [Emphasis added]
Who are these idiotic "housing economists?" High prices might bode well for home owners, but for those of us who do not own a home and would like for prices to come down, we're getting screwed. The government subsidizing home prices to help the well off at the expense of the poor is not remotely "good."
The question is whether the banks will ever put up enough housing for demolition to make a difference. The Obama administration says it is working on its own plan to revamp its loan modification program in order to help keep more people in foreclosure in their homes, reducing the number of foreclosed properties on the market. Some areas of the country are looking at how to speed up foreclosures in an effort to return some normality to the market. It's not clear that any of this will work. Certainly, the idea that we are at the point where banks would be better off knocking down houses that reselling them shows there is still something very wrong with the housing market. [Maybe the government subsidizing the banks to do just that is contributing to the problem? - InfoLib] But what is clear is that banks and others are at the point where they are ready to try something new to boost the housing market. And that is a good sign for the future.
Actually, it's a horrible sign for the future, but it's a perfect sign for why things are so screwed up in the present.

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Comments 1 - 4 of 4 Add Comment Page 1 of 1

Posted: Aug 03 2011, 12:53 PM

67232 Doen't ANYONE find something terribly wrong with this picture in the UNITED STATES OF AMERICA????? WHY??? WHY would you bulldoze homes that HOW many of our homeless in this country could benefit from? Those thousands that live in tent cities..WTH is WRONG with people??????????????????? I'm losing ALL faith in what this country is standing for now. God Bless America???? How about AMERICA BLESS GOD??? Ya know, that GIVING, GRACEFUL mentality that God THE FATHER instructed us to have? Sounds like a plan to me.

Posted: Sep 03 2011, 11:23 PM

7447 "Fannie Mae has a program to sell houses to local municipalities for around a few hundred dollars."

If Fannie Mae wants to unload houses on city governments for a few hundred dollars apiece, then why didn't they sell them to poor people for the same price? Wouldn't Fannie Mae be equally free of the tax liability for those homes, either way? How does a local government deserve such a wonderful break with low housing prices, when poor people do not?

"Since 2008, the JPMorgan has donated or sold at a discount 1,900 houses to city or county officials."

Why hasn't JPMorgan been donating or selling those houses at a discount to poor buyers? How did it happen that "city or county officials" qualified for these discounts when poor people did not?

Posted: Sep 04 2011, 1:58 PM

9870 If you REALLY want to know WHY.... Take the time to read this:

New Order of Barbarians - transcript of tapes I-III

This country is being destroyed by design...

Posted: Nov 19 2011, 10:08 AM

174107 agenda 21

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