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November 18th, 2011

Some foreclosures go “up in smoke”

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Intro TravisWith so many issues weighing down our national economy these days, it’s easy to get excited about the little victories–a positive jobs report or a month-over-month increase in home sales. But one of the core problems facing this country’s housing market isn’t expected to go away anytime soon: distressed real estate.

According to the Center for Responsible Lending, we’re not even midway through the foreclosure crisis. And the longer the crisis drags on, the more downside foreclosures will bring to their surrounding communities.

Up until now, we knew vacant properties attracted squatters, grew mold and were often left vandalized by the former owners. But we’re quickly realizing the problems go far beyond those.

The latest black cloud to be cast over foreclosed properties is the growth and/or manufacturing of illegal drugs. A recent arrest of a Las Vegas mother and her two sons for growing 61 pot plants inside their foreclosure-turned-rental has highlighted a budding trend of illegal grow houses in foreclosure-ridden states like Nevada.

According the U.S. Drug Enforcement Administration, authorities busted 153 more indoor grow sites and confiscated 12,000 more pot plants in Nevada in 2010 than they did in 2005. In comparison, California authorities raided 791 indoor growing operations in 2010. Whether they’re being used to grow marijuana or manufacture meth, foreclosed homes are quickly becoming a breeding ground for illegal activity.

Albert Clawson is a property manager who is responsible for inspecting the condition of foreclosed properties. In a recent piece for the Washington Post, Clawson provides us with a glimpse into his sad and sometimes disturbing job.

“I work in a real estate office providing boots-on-the-ground information on the condition of each property and who is in it. Between the mortgage and the foreclosure, anything could happen,” said Clawson. “We might find that a house is occupied by squatters, abandoned, burned down or even demolished. We might find a crack den or a meth lab. There might be pot plants or a dog-fighting ring — sometimes we find the casualties of these battles.”

Unfortunately, there isn’t a clear-cut conclusion to this story; the end of the foreclosure crisis isn’t clearly in sight. And the longer this epidemic drags on, the worse the stories will get. The recent robo-signing scandal and states in which foreclosure proceeding must be handled through the courts continue to drag out this long and painful process.

Sure, modifications and refinances will serve to keep some borrowers in their homes, but it can’t help cure a nasty problem that has unfortunately embedded itself into too many neighborhoods throughout the country.

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2 Responses to “Some foreclosures go “up in smoke””

  1. Brandon Says: November 18th, 2011 at 3:54 pm

    This is serious, and a number of factors are going into it, including poor communication between distressed homeowners and lenders. People facing foreclosure have a choice between walking away and forcing a short-sale. A good short-sale real estate agent can help guide these people through the process.

  2. Jim wagoner Says: November 19th, 2011 at 5:21 pm

    I personally know of a landlord who stopped his payments almost 2 years ago, just wanting the property to be foreclosed because he was so far upside down in value and monthlypayments. A foreclosure daye still hasn’t been set.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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