The Tomb of The Unknown Bailout

Over at a financial forum...

P - Fed Assets - "I certainly wouldn't call the crap the Fed is holding "assets".  My brother has one of those assets for a neighbor.  There was a house, a $1M house mind you, that was foreclosed and then the bank sold the asset portfolio and it has been sitting empty for 6 years with no attempt to sell and the house is now collapsing in on itself as it got mold and started rotting and now the roof is caving in and my brother has to petition the town just to get the lawn mowed.  It's horrible, yet it's considered a $1M asset in the Fed's portfolio.  Just wait until that bill comes due!  "

Many know what happened in this paragraph. P just described to a tee, what occurred in many US areas since the crisis. Florida was a prime example as in some areas two in five homes (40%) were bank trust owned (the banks had to put those NPL - non performing loans or assets off book, hence the trusts). As you drove down a street you could tell which homes were occupied and which were not. The majority of homes had been gutted for all usable materials (appliances, counters, fixtures, windows, doors, flooring, AC, W/H, you name it.)  The maintenance conditions (lawn mowing, swimming pool) were a joke. In addition, there were many other homes which the banks allowed the defaulted or foreclosed owners to remain in rent free, as long as they paid the utilities and maintained the appearance, some for as long as five years.  Don't you wish you could get that deal from your bank?

Many know the tomb of the unknown soldier, but many probably don't know what happened in this paragraph.  Most of those foreclosed REO homes were NEVER charged the appropriate assessed property taxes by the taxing authorities.  They were "taxed" based on the "unimproved land value" with all other taxes and special district impounds being waived or given legal forbearance by the taxing authority. The resulting city, county and state budget deficits were made up through, reductions in public services, borrowing (public debt) and tax increases on the rest of the property tax base.  Even though they profited, not even the bulk purchases by the hedge funds (tens of thousands of homes at 10 cents on the dollar and lower) were required to make restitution on that public debt. And that is the tomb of the unknown bailout.  Out.