Foreclosures and Hurricanes: A Nasty Combo
| posted by admin |The fallout that followed in the aftermath of Hurricane Katrina in 2005 left many Gulf Coast residents homeless or facing foreclosure — or both. Temporary relief from the devastation was granted in the form of a foreclosure moratorium at the time.
Given today’s economic climate, however, there exists a connection between foreclosures and hurricanes that poses a potentially even greater threat to the health and safety of U.S. residents from Texas to Maine.
The Institute of Business and Housing Safety is reporting that the increasing number of abandoned or vacant foreclosed homes is so great as to generate real concern for the oncoming hurricane season this year.
As opposed to the hurricanes causing the foreclosures, this time around the foreclosures already exist, and in much greater numbers than back in 2005. In April, the U.S. Commerce Dept. reported a rise in homeowner vacancies for the first quarter of 2008 from the previous quarter and the same quarter a year ago.
The key concern for public safety here stems from the possibility of flying debris coming from abandoned foreclosures that have been sitting empty and in a state of disrepair.
The potential for damage to other homes and personal property, along with the hazardous danger of bodily harm involved, may give support to the idea being promoted in many cities, counties and states around the country to hold lenders liable for maintaining the foreclosed properties in their REO inventory until they are sold.
Some governments already have legislation in the works to charge lenders a registration fee for every REO they own, as well as impose penalties for not maintaining the properties while under their ownership.
Most jurisdictions looking at these new laws justify them by noting that the existence of foreclosures devalues surrounding properties in the neighborhood. But is climate a good enough justification for these new laws as well?
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