In light of this atrocious story, it might be time to think about some new initiatives. (H/T: Zillow Blog)
Not only is the bank owner losing any potential value in this property, but it will cost the bank an additional $10,000, “to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer’s closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.”
- Rough outline of a new Homestead Act:
- Banks surrender the property to the municipality. They can claim a loss for future tax writeoff, but importantly, they get the property off their balance sheets.
- Municipality waives all back taxes, transfer fees, etc.
- Utilities write off all water/electric bills, etc.
- Property is made available as is to any legal resident willing to live there.
- You must stay in the residence for at least five years.
- During your stay, you must maintain the house in reasonable condition and not engage in any illegal activities in the house.
- It must be your primary residence for those five years.
- You must pay all property taxes and fees associated with homeownership, such as for trash removal, water and sewage, etc.
At the end of the five year period, the homesteader receives full title to the property free and clear.
In a stroke, you have eliminated the foreclosure problem, provided a path out of urban blight issues, and provided low-cost housing to families who actually want to work at achieving their American dream.