Why Banks Are Knocking Down Foreclosed Homes

Land donated to local governments
By Kevin Spak,  Newser Staff
Posted Aug 1, 2011 1:43 PM CDT
Why Banks Are Knocking Down Foreclosed Homes
A foreclosure/price reduced sign stands in front of a home for sale on February 11, 2011 in Miami, Florida.   (Getty Images)

(Newser) – Did the bank repossess your home? Well, we’re not sure if this will make you feel better or worse, but there’s a chance the bank won’t profit from it—or even use it in any way. Banks have such a glut of repossessed homes that they are increasingly choosing to just tear down the least valuable ones, Time reports. Bank of America, for example, plans to knock down 100 homes in Cleveland and donate the land to local government authorities. It has already donated 100 homes in Detroit and 150 in Chicago, and may do the same in nine more cities this year.

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It’s not alone: Wells Fargo has donated some 800 homes for demolition since 2009, and JPMorgan Chase claims it was among the first to break out the bulldozers, donating or selling a whopping 1,900 abodes to city and county officials since 2008. The deals free the banks of property taxes and maintenance bills, while giving local governments free land and potentially driving up home prices, so everyone's a winner. Well, everyone except the house’s former occupants, anyway. (Read more foreclosures stories.)

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