Donations of Foreclosed Homes Skyrocket

December 12, 2012; Source: USA Today | USA Today is reporting that donations of homes—many of which have been foreclosed—have increased significantly in the past year. I am not sure whether we are supposed to be happy about this. For instance, Bank of America donated 150 homes in 2011, and plans to donate 1,200 next year. Wells Fargo is ahead of the curve, having donated 1,120 homes this year—up from 295 last year. These two paragons of charity were cited by the treasury department in June, along with JPMorgan Chase, for poor performance in the federal HAMP loan restructure program. In short, they made the process so unwieldy that people would be foreclosed on while still in a miasma of negotiations with the same bank that was foreclosing. Kafka anyone?

Still, once a home has been foreclosed, allowing it to remain vacant creates problems for the neighborhood, so there are a number of charities that have been receiving and making best use of the properties—sometimes razing them and rebuilding or transforming them into common space, and sometimes refurbishing and moving new families in. In Cleveland, Cuyahoga Land Bank receives 120 donated properties a month—up from 80 a year ago—but this is in the context of 22,000 abandoned single-family homes in the county.

There are six million mortgages across the country that are late or already in foreclosure, so the numbers of donated homes pale relative to those. But many are expecting the numbers of donations to continue to rise, and where there is a trajectory like that there is an intermediary that sets up to handle the increase. Real Estate Donations in Illinois, for instance has handled 117 donated homes in more than a dozen states this year, in comparison to the 20 a year it handled previously.

This story makes NPQ’s hair stand on end. We’d rather see the land banks of the country and the Habitats given the properties than to see them lie fallow, but we can’t help but wonder what kinds of tax breaks are going to the donating banks, and we think it might have made sense for USA Today to mention the bad loan-restructure behavior of BOFA and Wells Fargo.—Ruth McCambridge