The financial and property systems continue to break, to the extent that many banks aren't even going through with foreclosure:
SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.
Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.
So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.
“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.
The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.
In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it.
Meanwhile, many county sheriffs are simply refusing to evict homeowners. These aren't just small town sheriffs either, they include, for example, Cook County (that's Chicago) Sheriff Thomas Dart.
The question becomes: if Sheriffs won't evict people and, even if they do, if banks won't foreclose on property, what happens?
You have a dead law and a collapse in a very fundamental part of society (at least as we know it).
Laws after all, are simply declared memes/taboos with a measure of majority agreement and physical force backing them up. That's it. Every society on earth has them, in some form or fashion. However, we usually take them for granted, so much so that it's easy to forget how quickly they can die when anyone stops giving a damn about them.
A little while ago, I speculated that given cities with swelling tent slums and large amounts of abandoned housing, the U.S. could easily see a powerful squatter movement emerge.
This, however, takes it a step further: squatters don't even need to fight landlords, property owners and the authorities if a) the authorities aren't going to evict and b) the banks aren't going to re-sell the property. I'm still analyzing this, because if this process continues, it's like they held the final, all-out class war -- and nobody showed up.