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Lenders Own Most of Foreclosed Homes in Connecticut

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By : John Cutts    99 or more times read
Potential homebuyers are starting to complain that most Connecticut foreclosed homes are legally owned by out-of-state lenders.

Most of these homebuyers have already made a down payment on houses in foreclosure only to find out that the properties are owned by out-of-state lenders who are not keen on selling the repo homes immediately.

The reluctance of big lenders to sell their foreclosed homes immediately only exacerbates the growing problem of abandoned and vacant houses in the state.

In New Haven, hundreds of vacant foreclosed homes are owned by big lenders who are slow to sell the properties to new occupants.

To address the foreclosed homes crisis in his city, Mayor John DeStefano urged 39 lending companies to register their foreclosure properties with the city.

New Havenís ordinance law stipulated that mortgage lenders will be fined $250 daily if they do not register their foreclosed homes and the name of a person to contact, mailing address and telephone number.

DeStefano, in his letter to lenders, urged them to be good neighbors by registering their foreclosed homes.

An example of this problem is the case between Deutsche Bank in Germany and New Havenís Water Pollution Control Authority (WPCA). The WPCA made a foreclosure on a property due to failure to pay sewer fees. The WPCA accounted for 10 percent of New Havenís foreclosures in 2008 due to sewer fee non-payment.

The property in question was auctioned and purchased by a homebuyer who made a down payment and waited for the courtís approval of the deal.

When Deutsche Bank, which legally owned the property, learned about the sale it made a move to block the deal. Deutsche convinced the court that the bank is the true holder of the mortgage. In effect, the WPCA and the homebuyerís deal was declared null and void.

Reacting on the case, DeStefano said that Deutsche purchased the majority of foreclosure properties in his city in 2008.

Real Options, Overcoming Foreclosures (ROOF) director Eva Heinzelman argued that Deutsche is the trustee for the foreclosed properties and it work with various servicers who are responsible for making decisions. She added that the problem is that sometimes it is difficult to identify who the servicers are.

ROOF is an organization that helps distressed homeowners who owns mortgage more than the market value of their properties.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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