BofA Donates Then Demolishes Housing to Cut Glut of Foreclosures
As the REO inventory continues to cause problems for large lenders, some have adopted new strategies for dealing with the issue: namely, demolition. For example, Bank of America has donated 100 foreclosed homes in Cleveland to a local organization that manages properties and is also contributing funds to cover the demolition of some of those homes. BofA is planning to do the same in Detroit and Chicago and has tentative plans in nine additional cities. Other lenders, such as Wells Fargo, Citigroup, JPMorgan Chase and Fannie Mae, are considering this strategy as well.
Moving homes out of the REO inventory is a major challenge for most lenders; the excess supply is depressing the market. Local nonprofits are expected to step in and help determine what comes next.
SOURCE: Bloomberg, 7/27/11