Bank Demolishes New Houses Acquired Through Foreclosure: Is This Happening Near You?

Images from the housing market collapse have been sparse, mostly foreclosure signs on overgrown lawns. That is, until one bank in Southern California decided to demolish four model homes and 12 nearly finished spec homes that it had acquired through foreclosure.

A local business blogger caught the following video of the destruction in process:

As reported by Patrick Thatcher of Victorville Daily Press, the developer who owned these houses filed for bankruptcy and Guaranty Bank assumed ownership of the foreclosed property.

Dean Smith, a Real Estate officer at Guaranty Bank, explained that the land around the buildings lacked paved road and other infrastructure required to bring the development up to code. "There are still substantial dollars that need to be put into the land before the city of Victorville will give certificates of occupancy on the houses and the bank isn't willing to put forward that amount of money," Smith told Thatcher.

The city of Victorville had fined the bank because the homes were out of code and Smith said the bank would be fined again if something was not done with the houses.

With a housing market suffering from an inventory glut, Guaranty Bank would have had a difficult time selling the homes once they were finished. "Our projections are that those houses would sit the way they are for at least five years, what would they be worth then?" Smith said.

According to the website that released this video, Visions for Victory, there are other bank owned houses in Southern California that are scheduled for demolition. This could be happening in other areas around the country as well.

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Comments

[ravencalling]

Okay - how many homeless do we have in this country? God this seems wasteful to me!

[bulfinch]

Bush legacy: Corn used for fuel, houses built and bulldozed.

[fallout4U]

People that own a house should be happy, this lowers the existing inventory of homes on the market. This in turn makes your home more valuable.

[wordvarc]

Reminiscent of the Vietnam propaganda...
"We have to destroy the village to save it..."

[ssfahrer]

Just remember that during the Great Depression, staples such as milk were often spilled down the sewers because no one could afford to buy it. I have been clamoring for this sort of thing to happen in the housing market for quite awhile under the phrase, "Foreclose and Bulldoze". It's about time someone finally listened to my sage advice....

[leeman79]

These homes should have never have been built. How many times are we going to have to go thru this nonsense? Short term profit/long term destruction: Reagan, Bush II, ?

[vagabondvet]

Housing Boom started during Clinton Presidency, not during Reagan's or Bush's.

http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html?sec=&spon=&pagewanted=1

[DeadPhish]

True, but in the 90's the loans that were made were good. With Bush - there were NO rules, and therefore, the Bust was the fault of Bush.

Oh, and you can thank Reagan for most folks having no Union to represent them in this "downturn" aka "Depression 2.0"

[Haditup2here]

What a waste. Next time a home is to be built, funds need to be secured by the buyer wishing to purchase a home. Some companies are already doing this and it gives the customer flexibility in regards to the layout.

I hope those in the Real Estate learn from this and work towards ending urban sprawl.

[vagabondvet]

Laws against urban sprawl causes housing bubbles

http://www.nytimes.com/2005/08/08/opinion/08krugman.html

[SCG]

I never saw this in the Milton Friedman propaganda film strips.

[MIKEBC]

More hard times in republican depression #2

[stargazer13]

we have to tear it down says the banks because homeless people might squat and we can,t have that

better to tear down then build up I have fallen into the looking glass yet again .

and for those who say it,s there property they can do with it what they want

just remember you said that the next time your neighbor lets his yard become a junk yard

don,t want you being the one who calls the city on him and complaining about it because it is his yard and he can do what he wants to with it

what a waste of time and materials no wonder we are in such bad shape financially we waste so much

[faceplant]

Well, yes, you can't have that. People want to somehow romanticize the "homeless". Don't. Squats are not pretty. Ever been in one? Filth. No running water, so nobody flushes the john. Then they start to relieve themselves in the corners. No garbage service, so mouldering, stinking trash piles up. People are usually homeless because they have serious problems. Thus, you can expect the floor to be awash in broken malt liquor bottles and dirty needles. Serious substance abuse costs money, and one way to obtain it is to burglarize the neighbors. Since people are mentally ill and /or high as a kite, expect loud disputes at 3 AM. No power, so candles are sometimes used. This is a fire hazard, of course. It's much better to get homeless guys under some sort of supervision and into mental health or substance abuse treatment than to let them take over the vacant house next to you.

[USA2Sense]

Great example of community responsiblity - with all the homeless families out there and no place to go???

Why are all these churches with their vast assets - not out there buying these homes and turning them into place to live......­......some­thing wrong here........

To demoligh perfectly good homes is a sacrilege - but I guess that's what greed and profit is all about.....

[stargazer13]

Dear USA 2sense

if churches were a solution we would be on easy street !!

America has more churches then any other country in the world

and yet the people suffer and continue to suffer

so church,s are not the answer it seems to Americas problems

[fallout4U]

There are more meth houses than churches. That could be part of the problem in this country.

[Retrofuturistic]

When banks get ownership of a house, they turn off the heat. Then the pipes burst and the water does a huge amount of damage. Then the house has even LESS value....

[Retrofuturistic]

It's not happening near me, but I wish it would. One of the foreclosures in my neighborhood, that the people trashed, brought the value of my house down by $100K.

[afgail]

A scam to be sure. Why not finish the homes and rent them out until he market turns around? Putting in utillites and roads would be invested patient money. But greed reigns supreme. I'm surspect the banks have an economic insentive to pusue instant greed over long term investment.

[loki]

6 months ago when this story was making the rounds banks were denying it and said they would never do this. It was even on NPR and CNN back then.