Ohio recorded fewer foreclosure filings in 2010 than the year before. The slight decline is welcome news, but as a report this week by Policy Matters Ohio notes, the housing nightmare is far from over. The Cleveland-based think tank reports a continuing crisis, with an increase of 142 percent in home foreclosures in the decade since 2000. One in three Ohio homeowners owed more on their loans than the homes were worth in 2010, and 9.1 percent of mortgages were delinquent or in default — clear indication that foreclosures will persist at a crisis level for several more years.
All the more disturbing, then, the evidence that “bank walkaways” or abandoned foreclosures (when mortgage banks and servicers fail to complete foreclosure proceedings to take responsibility for the properties) are compounding Ohio’s foreclosure problems.
Pressed by U.S. Sen. Sherrod Brown to investigate the practice, the Government Accountability Office found bank walkaways occur infrequently. If that was some relief, the bad news is that the majority of instances between 2008 and 2010 were concentrated in cities in Ohio (Cleveland, for certain), Michigan and Florida.
The study found that without a requirement to notify borrowers or communities, mortgage holders typically abandoned foreclosure when the property was worth less than the cost to foreclose. Most frequently, the targets were borrowers with subprime loans or low-value properties in economically depressed areas. In short, abandoned foreclosures hasten blight, leaving local governments holding the bag for maintaining vacant and abandoned properties and warding off crime while property values and tax revenues plummet.
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