Becoming a homeowner is a dream many Americans have. They work hard, pay their bills on time to keep their credit scores high and save so they can qualify for loans. Circumstances can arise where payments cannot be made. Their properties go into foreclosure and can become abandoned real estate.
Financial difficulties can develop with qualified homeowners and investors. Loss of income can cause loan payments to be late or not made at all. Also, loans made to those who are not qualified, like what such as occurred in recent years, add to the amounts of abandoned properties which can cause urban blight.
Assignments of loans
Financial institutions such as banks and mortgage companies loan monies to investors and individuals. These loans are sold and bought all the time in transactions called assignments. They are supposed to be filed or recorded in the land records at circuit court and a copy sent to the homeowner. Doing so is very important. It identifies the financial institution that is now the current owner of the loan.
When payments become delinquent, a substitute trustee is recorded in the clerk’s office. It is giving notice that the financial institution that now owns the loan or note wants its money or the house. If the owner does not comply with catching up with the amount that is delinquent, a foreclosure will ensue.
For years there were gluts of foreclosures. Programs were set in place for troubled loans to be refinanced or modified at lower interest rates, such as the HARP (Home Affordable Refinance Program). These were attempts by the government to keep homeowners from losing their homes and the property from becoming abandoned real estate. Unfortunately, the programs were slow in implementation. Soon, they became glutted as well.
Since there were so many foreclosures, the process became burdened with mistakes. Assignments and substitute trustees were not filed or were done so incorrectly. Ownerships of some loans were not known, even by the lenders. Sometimes the original loan documents could not be found. Without valid owners, the houses stood vacant and were eventually declared abandoned.
Making the Derelict List
Properties on Derelict.com are frequently abandoned or on the verge of abandonment. They are largely vacant or are no longer being used for their original purpose. In other cases they become government owned properties though a process called escheatment.