One bank solves glut of repossessed homes with wrecking ball
May 5th 2009 2:30PM
Updated Dec 4th 2009 12:06PM
I wrote recently about a problem many communities are facing: ghost neighborhoods filled with empty, repossessed houses ripe for crime. Some cities, anxious to maintain property values, have taken to fining the banks that own these homes if they fail to maintain them. Now, at least one bank has decided to cut and run on its unsalable book of properties by bulldozing them to the ground.
Guaranty Bank of Austin, Tex., took back a number of homes in a partially completed development in Victorville, Calif., near Los Anegles. The homes, built only two years ago, were priced to sell in the $300,000 range, but with prices plunging in the area, the bank found itself upside down with no prospect of surfacing. The city had begun pressuring Guaranty, which repossessed the failed development in late 2008, to deal with squatters and vandalism. In response, the bank decided it would be cheaper to flatten the homes than complete the project.
An expert consulted by The Wall Street Journal estimates that the demolition of these houses will run the bank around $100K per. Ironically, Guaranty Bank is a holding of Guaranty Financial Group Inc. (GFG), which is currently working to comply with a cease and desist order from the Office of Thrift Supervision requiring it to secure its core capital ratio and risk-based captial ratio with the support of the federal bailout funds.
Video courtesy of Daniel, videovictorymanifesto.com