What does a lender do when it has so many homes in foreclosure and vacant that they've become a blight on a community? One bank has decided to give them away.
What does a lender do when it has so many homes in foreclosure and vacant that they’ve become a blight on a community? One bank has decided to give them away.
Bank of America Corp. plans to give away as many as 150 properties in the Chicago region through a deal with the city aimed at addressing the growing problem of vacant and abandoned properties.
It may be the first of many such initiatives. Losses and litigation related to foreclosures and badly written loans resulted in Bank of America posting a 39% drop in net income in the most recent quarter, according to a report by the Associated Press. At the end of the first quarter, Bank of America had $2 billion of foreclosed properties on its books, and homeowners were late by 90 days or more on $24 billion of its total loans.
"Unfortunately," the Charlotte, N.C.-based bank said in a statement, "many homeowners faced with unemployment, underemployment and other economic hardships have transitioned to alternative housing situations, and in many cases, have walked away from their homes, leaving behind vacant and deteriorating properties that can cause neighborhood blight."
As part of the program, Bank of America will register properties with the city in the program, when the property has been identified as vacant and abandoned. It will then target up to 150 properties and refer them to a newly implemented court procedure that will attempt to speed up the foreclosure process. Currently, the timeline for vacant and abandoned properties to move out of foreclosure in the area averages 18 months, the bank said. The bank will also provide funds to demolish buildings on vacant properties that have been condemned, and donate foreclosed and vacant condominiums to the city to upgrade, preserve and stabilize management of affordable rental housing.
The bank also recently held a mortgage modification outreach event and opened a new full-time customer assistance center in Chicago. Bank of America has 12 full-time customer assistance centers, and plans 28 more in Atlanta, Baltimore, Denver, Detroit, Houston, Miami, Milwaukee, New Orleans, Philadelphia, San Antonio, St. Louis, Washington, D.C., and other major cities.