Banks "donating" foreclosed slum properties for demolition
In too many cases, big banks and servicers have been transformed into slum lords, owning property that they can't rent and certainly can't sell. The property just sits there, blighted and moldy.
Recall that the city of Los Angeles sued Deutsche Bank in May, charging that it has become one of the biggest slumlords in the city of angels. It sought fines and an injunction to force the bank to clean up hundreds of properties. For bank executives, it's never pleasant to be confronted with news articles about blighted structures and crimes committed inside of them. This is a problem for many of the top banks and servicers.
According to Bloomberg, they have come up with straightforward solution: Demolish more houses. To that end, they are "donating" more houses to neighborhood stabilization entities that plan to demolish them. In some cases, banks will help pay for the demolition. Bank of America has plans to donate 100 foreclosed homes in the Cleveland area for this purpose. The bank has similar programs up and running in Detroit, Chicago and others.
Given that these homes are not really inhabitable, this seems like a wise move, especially as the bank may be entitled to a tax break. One expert tells Bloomberg: "No one needs these homes, no one is going to buy them. 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."
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