The real estate market is stinking bad, especially when whole blocks of foreclosed homes begin to pull property prices down in the surrounding areas. But the problem can be made much worse when the guys who are supposed to take care of these homes aren’t doing their jobs.
That’s exactly what Fannie Mae and Freddie Mac are going through in the State of Florida.
The two agencies collectively owned 179,000 foreclosed homes in 2011 – thrice the number of homes they handled back in ’07. The agencies want to keep the homes in tip-top shape so their values won’t go way down in the long run, so they hired contractors to maintain the homes.
The problem here is that the two agencies didn’t do a thorough enough job of inspecting the work of their contractors.
The agencies didn’t conduct a thorough background check on the contractors, the agencies did not track complaints well, the agencies did not monitor corrective actions for errant contractors and the agencies didn’t have any means to guard against fraudulent and/or shoddy reimbursement claims.
In short, Fannie Mae and Freddie Mac have been paying huge sums to contractors that don’t get the job done while letting property values plummet by anywhere between $8,000 to $17,000.
Why should this matter to you? Well, if you live in a neighborhood full of foreclosed homes, the last thing you want to see happen is those houses rotting and decaying away. Even if they’re not yours, those ugly abandoned homes will pull down the value of all nearby properties.
The last thing you want to do is to pay mortgage to a house that isn’t even worth your debt anymore.
So if you see foreclosed homes in your area that are getting neglected or are being occupied by informal settlers (aka squatters), get in touch with the banks or the agencies and have them check up on the land. That single phone call might be the only thing preventing your house or your apartment from losing half its value over the years.