And I have been wondering about suburban slums for years. Sooner or later, it will become economically inconvenient to live in an 8 bedroom McMansion 60 miles from your workplace. The reverse white flight will re-gentrify anything within biking/walking/good public trans. distance of the high paying jobs, and the now displaced lower economic classes will probably be forced into the collar areas and have to deal with inefficient public transportation.

That’s my theory at least. You might have to wait twenty years, but if you snap up property that is relatively close to major urban areas and already established public trans, I don’t think you can lose.

One of the biggest problems is the actual value of the homes has been artificially high for many years now. “Crappy” poorly-built houses popped up in developments everywhere. Most of them start falling apart after a few years, immediately lowering their value, which combined with the declining economy leaves the banks holding notes on properties that aren’t worth anywhere near what the notes are worth.

I had a new house in a development near Denver that after four years had a leaky roof, crumbing foundation, cracked and sinking patio and deck, along with creaky floors and windows that didn’t open right. Hard to sell something like that anything close to what it was originally purchased for. Fortunately I was able to unload it in a pre-forclosure arrangement.

I agree with what someone else posted earlier- it would make more sense for the banks to allow people to continue to live in them. Either cut or eliminate the interest for a given time-period, and hope the market turns around in that period. It keeps people in the homes, reducing blight, which in the long run will benefit the neighborhood and their bottom line.

instead of trying to game the system, why not actually fix it?

make the banks liable at the moment of foreclosure. give them the incentive to be responsible and actually make the loans they should not have made work out.

a lot of people did stupid things to get mortgages… but the mortgage companies and the banks constantly looked the other way and gamed the situation. instead of bailouts and propagating limbo loopholes, they should be made responsible… so should the ‘subprime’ borrowers.

taking out a 750k mortgage and trying to default on it after 100k and ‘get a free house’ is morally reprehensible. these people aren’t gaming the banks- those costs are recouped by responsible people getting LOWER interest rates, straining the banking system so that responsible people can’t borrow as easily, and making taxpayers foot the bill.

The revolutionary/consumerist view of ‘take back the system!’ sounds nice and pretty – but its really just a group of assholes who want the general public to foot their bills. Grow up.

I think the reason Detroit hasn’t gentrified is because there’s no jobs there. They need a new industry first.

It’s part of the plan to “re-wild” certain parts of North America, namely rural and suburban areas while people are crowded into high-density smart developments. (Oh, after our shadowy overlords exterminate 80% of humanity with Sars and bird flu and what-have-you).

http://video.google.com/videoplay?docid=6970918667972418051

Keep in mind also that a “mortgage” has two parts: a promissory note and a lien. The lender can always sue on the promissory note (i.e., like any other unsecured creditor) and obtain a judgment without ever seeking to foreclose on the lien and obtaining the property.

I also live near Ann Arbor. One of the factors in that situation may be the University of Michigan. In my experience in a college town, the rent is driven up by the number of students that try to occupy the town 9 months of the year, forcing lower income people to the fringes. For most students at large Universities, there simply isn’t parking available for the majority of students to commute in to school; they absolutely have to be within public transportation or walking distance. I think in that respect, maybe Universities are a bit ahead of the times in respect to the gentrification of urban areas.

In Chicago the gentrification appears to be at least party supported by government policy. Projects have been razed all over the city, but replacement housing has not been made available. Instead, the city talks about having similar net amounts of affordable housing in mixed-income areas over a broader (five or ten year) period. Obviously the displaced poor people can’t wait five or ten years for a replacement dwelling in the inner core, so they seek cheaper rents in the suburbs. Not yet in the exurbs, but still outside of the city limits.

Of course, that is a different issue than the banks essentially destroying communities by refusing to either keep the properties up, or allow different uses for them.

This issue of approving loans of significant amounts of money to what appeared to be ‘bad’ re-payment customers is what’s being discussed regularly in this part of the world.

Let’s say Bob defaults on his mortgage, and the bank forecloses, but chooses not to take ownership of the home. Who owns it?

If I come along and decide to buy the house/property, who do I buy it from? I doubt I could just move in and assume ownership.

I’d love to see a lawyer provide an opinion on this kind of thing. Speculative squatting of abandoned sub-prime properties!

http://www.boingboing.net/2007/11/21/land-grab-case-in-bo.html

1) Take out sub prime mortgage on house
2) Buy house
3) Take out home equity loan on house
4) Take out second mortgage
5) Default on loans
6) Bank takes property but no title
7) Squat in own house
8) Claim adverse possession
9) Get title to house
10) profit.

“…crappy, formerly overpriced sub-prime housing…”

The housing may or may not be a prime piece of property and therefore, you could call it sub-prime.

But that is not the “sub-prime crisis,” which relates to the extremely generous terms, lack of down payment and waived income documentation requirements for borrowers with less than prime credit, i.e. sub-prime borrowers. Naturally, a higher than normal percentage of these have defaulted.

The current real estate market, foreclosure rates and credit crunch issue is a more diverse and complex set of issues.