Banks/Lenders walking away from homes?

[The Straight Story]

There's no doubt lenders have walked away from homes when it's in their financial interest to do so, when a growing number of properties are worth only a few thousand dollars.

In Cuyahoga County, foreclosed homes that lenders or mortgage companies bought at sheriff's sales have recently sold for as little as 30 percent of the home's previous value.

Fed Governor Says Lenders Flee Foreclosures in Devastated Neighborhoods

Rather than foreclosing on defaulted mortgages in neighborhoods devastated by the economy, lenders are abandoning them because the cost of proceeding with foreclosure is greater than their value, Federal Reserve Governor Elizabeth A. Duke said yesterday.

Anecdotal evidence suggests that these "toxic titles" have placed significant numbers of properties in a difficult state of legal limbo, she said.

The increased rates of foreclosures and the related economic downturn have hastened a cycle of decreasing property values. Declines in state and local property and sales tax revenues result in even more vacant homes and deteriorating neighborhoods.

http://www.upi.com/Real-Estate/2009/12/09/Fed-Governor-Says-Lenders-Flee-Foreclosures-in-Devastated-Neighborhoods/7351260386345/