Should Banks Maintain Abandoned Properties?

Walking away is not just for homeowners anymore. Now banks have joined in and are walking away, leaving thousands of homes vacant because they don’t want to be responsible for maintaining them. While housing bulls urge investors to buy up houses, banks that could control property ownership merely by foreclosing and paying the back taxes, homeowner’s dues, and other expenses are saying no thanks. The math just doesn’t work.

The Obama administration is proposing the gradual phasing out of federal mortgage giants, Fannie Mae and Freddie Mac. More than 90 percent of loans in the mortgage market currently flow through the two corporations. The proposals were detailed in a white paper released last week and coincided with a new study showing huge racial disparities in mortgage lending since 2004.

Michael T. Snyder submits: Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) have become gigantic financial black holes that the U.S.

The Securities and Exchange Commission charged six former top officials at Fannie Mae and Freddie Mac with securities fraud Friday. CEOs Daniel Mudd and Richard Syron were among those charged with misleading investors about the firms' true level of exposure to sub-prime mortgages. Fannie Mae and Freddie Mac were seized by the government in 2008 and have required $150 billion in taxpayer support to stay afloat.

South Korean apartment tower (cc photo by Bitman)

The federal bailout of mortgage giants Fannie Mae and Freddie Mac could get a whole lot more expensive in the next few years. The agency that regulates the firms is out with new estimates, and the price tag is hefty -- somewhere between $90 billion and $215 billion over the next three years, depending on the economy.