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HOMES ALONE

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By SHANNON BEHNKEN

sbehnken@tampatrib.com

Published: July 5, 2009

TAMPA - Financially-strapped homeowners have walked away from homes in foreclosure for years. Now, some of their lenders don't want the houses either.

The result: vacant homes with unkempt yards and moldy interiors that may remain empty even longer.

Lenders are still filing foreclosure lawsuits, but real estate experts say some are avoiding taking back homes. As home values continue to drop, foreclosing and reselling the home doesn't always help lenders recoup losses. In fact, taking ownership of the home can cost the lender more money because then it is responsible for insurance, code enforcement fines and taxes.

In some cases, lenders are walking away completely.

April Charney, a lawyer with the Jacksonville Area Legal Aid agency, said lenders are dismissing cases or canceling auction sales after they realize a home is not worth what they thought it was.

"Some of these are cases we've litigated for years," said Charney, who is well-known among lawyers for representing homeowners in foreclosure lawsuits. "I'm getting about two dismissals a week now."

That's because foreclosure, in Charney's opinion, is a "failed business model." It used to be that when homeowners stopped paying, a lender foreclosed and sold the home. But in this economy, she said, foreclosing isn't always worthwhile.

"If the home doesn't sell at the auction at the courthouse steps, it becomes another vacant property in the neighborhood," Charney said. "It gets torn up, filled with mold right away."

Ralph Fisher, a lawyer in Lutz who has been fighting foreclosures for a few years, said lenders used to fight back. Now, he says, they're increasingly ignoring his clients.

"I have one lady who hasn't made a payment in three years," Fisher said. "We asked for some information, and the lender just disappeared. This family is still there, and they don't know what is going to happen."

Lenders' reluctance doesn't necessarily improve the plight of troubled homeowners. When a property's title is clouded by a foreclosure action, the homeowner can't sell or refinance.

"The homeowner is living with the unknown," Charney said. "There's nobody to pay, nobody will take a payment. There's nobody to talk to, nobody to explain what's going on."

Lisa Pride, who works in the foreclosure division of Hillsborough County Circuit Court, said there have been 3,874 foreclosure auctions scheduled so far this year in the county. Just 2,021 have occurred. The remaining were either canceled or didn't happen because the plaintiff's attorneys didn't show up.

The reason the sales didn't happen, though, is hard to pinpoint. The court data does not reflect foreclosure cases that lenders put on hold before scheduling a sale at the courthouse.

Aside from not wanting to get stuck with a vacant home, another reason foreclosures have stalled is because of a lack of resources to get all the cases through the court system in a timely manner, said Timothy Kingcade, a Miami lawyer who represents homeowners in foreclosure lawsuits.

Some instances are more drastic.

Although it's not widespread, some lenders are walking away, declining to take ownership of homes, even after they have won a foreclosure suit. When this happens, it's mostly in lower-income areas where housing prices have plummeted.

Housing advocates say that in some cities - including Jacksonville; Buffalo, N.Y.; and Kansas City, Mo. - city officials are dealing with vacant properties that nobody seems to want.

Kermit Lind, an expert on foreclosure law and a professor at Cleveland-Marshall College of Law, said the problem is particularly troubling because homeowners often find out that their lenders don't want their homes only after they've already left.

"The value is so low on some of these homes that when the appraisal comes back at something like $10,000, the lender just walks away," Lind said. "The collateral is just useful in securing the note."

The longer it takes for a lender to take back a home, the longer neighbors are left staring at eyesores, Charney said.

Reporter Shannon Behnken can be reached at (813) 259-7804.

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