Foreclosure Packs One-Two Punch as Banks Walk Away From Seized Homes
SANCHEZ: Boy, I just want to let you know that we've been getting a ton of responses on the Rick Pitino story. The coach who is now involved in a sex scandal. We have been following it for you, and it probably is the number one story that people have been reacting to. We'll continue it get your thoughts. Hit by foreclosure and then hit again. That's the reality for some families who are on the losing end as banks try and bail out, fail out, literally. CNN's Alina Cho takes a look at what happens when banks simply walk away.</s>ALINA CHO, CNN CORRESPONDENT: Hey, Rick. This is something that frankly surprised a lot of us around here. People whose homes have gone into foreclosure are finding out months, even years later, that the very banks that seized their homes are walking away from them. It's leaving the homeowner confused and, worse, stuck with thousands of dollars in bills.</s>CHO (voice-over): When Dellian and Valerie Sharp found out the bank was taking possession of their home after they defaulted on their mortgage, they thought it was the worst day of their lives. They were wrong.</s>DELLIAN SHARP, HOMEOWNER: We could spend 45 days in jail over this housing issue.</s>CHO (off camera): Does that seem ridiculous to you?</s>SHARP: It does to me, because it's like, we don't own the house.</s>CHO (voice-over): They do own it. In November of 2006, a judge agreed the Sharps' home was the bank's property and should be sold at auction. The couple moved out. But a year later, they learned Bank of America never followed through on the foreclosure. In a statement, B of A told CNN the bank has not foreclosed on the property, and the customer still holds the title. The Sharps are shocked, and the practice is perfectly legal.</s>JOSIAH MADAR, NYU FURMAN CENTER FOR REAL ESTATE AND URBAN POLICY: A number of the foreclosed properties have little value left in them by the time they're reaching the end of the foreclosure process. And if it's going to be more expensive to follow the foreclosure all the way through and take the property, they just won't do it.</s>CHO: It's happening in cities across America, banks walking away from so-called toxic titles. The Sharps are facing thousands of fines from the city of Buffalo, New York for property violations and unpaid taxes. That's on top of the thousands they've already paid in court fees. Daniel Benning works as a housing court mediator. He calls the vacant homes vulnerable targets.</s>UNIDENTIFIED MALE: These are attractive to persons of criminal intent.</s>CHO (on camera): Because they're empty.</s>UNIDENTIFIED MALE: They're empty. The bank refuses to allow anyone to move in. But they refuse to do anything to the property, as you can see. And it affects not only this property but the properties next to them.</s>CHO: The City of Buffalo even filed a lawsuit, alleging 37 banks that walked away from foreclosed homes are responsible for the city's loss in property tax revenue and an increase in police and fire costs. As for the Sharps...</s>D. SHARP: When you look and you find that something that you thought was gone and is still there, OK, now it's, what's next?</s>CHO (on camera): Well, what is next?</s>D. SHARP: We have no idea.</s>VALERIE SHARP, HOMEOWNER: No idea.</s>D. SHARP: We have no idea.</s>V. SHARP: No idea.</s>CHO: Now, as I mentioned, this is happening across America, but hardest hit are Rust Belt cities. Places like Detroit and Flint, Michigan. Buffalo and Cleveland, Ohio. Cities that have older housing stock with declining value. So, the banks simply don't think it's worth their while to pay all the legal and administrative fees that come with foreclosing on a home. So, Rick, they're simply walking away. Rick?</s>SANCHEZ: Good stuff. Thanks so much for the explanation. I'm Rick Sanchez. CNN NEWSROOM continues now. Hold on to your hats, folks. Put your seat belts on, strap on, it's Tony Harris time.</s>TONY HARRIS, CNN ANCHOR: Thank you, doctor.