Homeowners aren’t the only ones making an investment decision to walk away from their mortgages. Apparently banks are walking away from their abandoned properties too. Banks that hold properties that suffer from deferred maintenance, vandalism, or declining property values may cost more to foreclose, manage and sell than the property is worth. In situations like these, many banks are a choosing to abandon the vacated property and consider it a loss.
We’re starting to see banks using the walk-away option in more locations in the midwest and certain areas in Florida. This wide-spread trend is leaving lots of abandoned properties in poor neighborhoods, furthering the neighborhood’s deterioration. In neighborhoods where several houses are being abandoned the neighborhoods are starting to deteriorate as vagrants and crime are moving in while property values are dropping even further.