As part of a new national strategy to deal with foreclosed and abandoned houses it can’t sell, Bank of America will donate 100 foreclosed houses in the Cleveland area for demolition in partnership with a local agency that manages blighted property, Bloomberg News reported. The bank is planning similar strategies in Detroit and Chicago, with more cities to come, it said.
Getting rid of repossessed properties is one of the biggest issues facing lenders nationally; in the U.S. $1.68 million houses, or one in every 77, were in some stage of foreclosure as of June, Realty Trac said. If these properties were to flood the market, it would negatively affect prices and discourage buyers.
“There is way too much supply,” said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization, which works alongside lenders, government officials and homeowners to save vacant homes. “The best thing we can do to stabilize the market is to get the garbage off.”
Christopher Thornberg, founding partner at Beacon Economics agrees: “No one needs these homes, no one is going to buy them,” he said. Bank of America is not going to be able to cover its losses, so it might as well give them away and get a little write-off and some nice public relations.”
Wells Fargo, JPMorgan Chase, Fannie Mae and Citigroup are all considering similar strategies, Bloomberg said. [Bloomberg]