A new crisis: Lenders abandon properties

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Faulkner Avenue in Dayton is filled with vacant houses. Angel Borger says she'll never own another house after getting caught up in a real estate scam, which forced her into bankruptcy and left her with worthless properties even the banks have walked away from. This is the scene across the street from Borger's house.

Chris Stewart/Chris Stewart Faulkner Avenue in Dayton is filled with vacant houses. Angel Borger says she'll never own another house after getting caught up in a real estate scam, which forced her into bankruptcy and left her with worthless properties even the banks have walked away from. This is the scene across the street from Borger's house.

Owner, neighbors, city left to deal with a home that no one has any incentive to improve.

By Ken McCall, Staff Writer Updated 11:43 PM Saturday, October 17, 2009

DAYTON — As if the mortgage foreclosure crisis wasn’t bad enough, sometime last year a new phenomenon began to emerge: Experts say mortgage lenders and banks began walking away from foreclosed properties, especially in urban areas.

The so-called “walkaways” can occur along several different paths, but the effect is the same — after threatening or getting foreclosure, the lender attempts to abandon the usually vacant property, leaving the original owner, the neighbors and the city to live with the damage.

Owners often accumulate taxes and zoning enforcement fines on property they believe they no longer own.

Neighbors watch their property values decline as the vacant property deteriorates and is often broken into and stripped.

Cities then have to bear the cost of boarding up a structure, maintaining the lawn and, eventually, demolishing it.

Dayton housing inspector John Carter did a study last year of 302 vacant and abandoned residences in the city and found that about 70 percent were bank walkaways. Of those walkaways, he said, about 20 percent had mortgages but no foreclosure was ever filed.

“There are several tragedies to it,” said Richard Stock, director of the University of Dayton’s Business Research Group. “The very first tragedy is, my God, these people could have continued to be in their house all this time, maintaining it. And then there’s the impact on the community.”

Keep reading: Owners of abandoned properties are hard to track down

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