One more reason to adopt the "Baker-Samwick" plan to allow borrowers facing foreclosure to rent their homes at market rates instead of losing them: A rising number of banks are simply abandoning foreclosed homes once their owners are kicked to the curb. In Wisconsin and Ohio, borrowers are leaving their homes when banks file for foreclosure, only to discover that their lenders eventually decided not to take the properties. That means those homes are still legally owned by the former borrowers, who are surprised to find themselves in possession of back tax bills and derelict residences. Here's Milwaukee Mayor Tom Barrett:"The debtor is gone, the lender is gone and here, Mr. Mayor, you've got this attractive nuisance in your neighborhood. Then I get a call from my fire department, and they're telling me we've got too many homes that are attractive nuisances, as they say, for arson or prostitution or drug trafficking. The current situation is a lose, lose, lose situation."It's an extremely pernicious decision on the part of lenders, with severe impact on the surrounding community. That's why during foreclosure, borrowers should be able to continue to live in and maintain their homes while paying rent. Dean Baker put up a short piece arguing in favor of this proposal today, go read it.
-- Tim Fernholz
