Banks bulldoze houses, despite millions being homeless
Bank of America and others plan to raze repossessed, vacant homes in some cities. Is demolition really an ethical solution?
Bank of America's corporate headquarters is shown in Charlotte, NC, July 19, 2011. The bank plans to destroy some of its repossessed homes that won't sell.
Chuck Burton / AP
In January of 2008, Bank of America CEO Kenneth Lewis announced that his company had the “rare opportunity” to buy Countrywide Mortgage for the amount of $4 billion.
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“Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation’s premier lender to consumers,” Lewis said.
Now with Lewis long gone, Bank of America (BoA) owns a glut of abandoned houses it can’t sell. So the largest mortgage servicer has decided to bulldoze some of its inventory. And BoA isn’t alone. Wells Fargo, Citicorp, JP Morgan Chase and Fannie Mae have started knocking over a few of their repos already. Lindsey Rupp reports for Bloomberg,
The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co. (WFC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Fannie Mae are conducting or considering their own programs.
“There is way too much supply,” said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., which works with lenders, government officials and homeowners to salvage vacant homes. “The best thing we can do to stabilize the market is to get the garbage off.”
Last May, I wrote of Detroit mayor Dave Bing’s plan to” right-size” the motor city by razing complete neighborhoods and speculated that the idea might catch on.
With millions of vacant homes and commercial building sitting empty around the country, this is an idea that could catch on. Don’t laugh, after all the government killed cattle and poured milk on the ground in compliance with the Agricultural Act of 1933 to support prices even as people where starving. Most farmers at the time couldn’t afford not to take the government money.
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