The foreclosure next door: saving your neighborhood

It is easy to spot.

The grass is crispy brown. Backyard weeds peek over the top of a 6-foot-tall fence. The trees are dead and swarming with insects. Fading notices are duct taped to the broken garage door and to the front door. Old newspapers and a sack of phonebooks sit on the sagging porch. It is the foreclosure next door — a symbol of pain and sadness and a harbinger of property values dropping.

Gaynell Instefjord has seen it all. For more than a dozen years the associate broker at Coldwell Banker Residential Brokerage in Sandy, Utah has worked selling foreclosed houses for several bank clients. In the best of circumstances, she says, it is a long process.

But it isnt the best of circumstances right now. In Utah, where Instefjord works, foreclosures totaled 6,567 during the third quarter, ranking the state in 6th place for the most filings. Foreclosures fell 39 percent from the previous year. Nationwide, foreclosure filings fell 38 percent to 214,855 in September.

This means that few people don't have a foreclosed or abandoned home in their neighborhood. There are things that neighbors can do, however, to preserve property values and maybe even get the home sold.

The Process

The process to foreclose takes time. The bank has to wait for three consecutive missed payments before it can issue a notice of default. Then another three months go by to give the homeowner a chance to fix the problem. The bank then files a notice of trustee sale. About 30 days later the trustee sale occurs and the foreclosure is complete. In all, it's a seven-month process. "That's the quickest it can happen," Instefjord says. "The process is dictated by the trust deed and note the borrower signed when purchasing the property."

But it doesn't have to go that fast.

Some banks, particularly with the high number of defaults these days, may wait for more than 12 months of missed payments before starting the process.

This means the bank is not the owner of the abandoned home until it is foreclosed. It can't keep weeds down and secure the property against vandalism. It can't board up broken windows and tarp a leaky roof to protect the house against further damage.

"Neighbors get upset that the house sits and looks bad and they wonder why somebody doesn't do anything about it," Instefjord says. "The reality is as long as the consumer owns the property, the bank can't do anything to it at all."

Behind Foreclosed Doors

Kitchen cabinets are torn down. Sinks and bathtubs are taken out. The baseboards are ripped out. Heating elements are removed from water heaters. Bleach is poured on carpets. Some people are not happy about losing their home.

"These types of actions come from that kind of anger you find at Occupy Wall Street. People get out of control on how they feel about banks," says California attorney Stephen R. Elias. Elias is the author of "The Foreclosure Survival Guide: Keep Your House or Walk Away With Money in Your Pocket" and is a contributor at Nolo's Bankruptcy, Debt & Foreclosure Blog. "You might say people brought this situation on themselves — and you would be right. But other times you would be wrong. The people were steered into a subprime mortgage when they could have afforded a prime mortgage — and in the end they weren't able to afford the payments. They were cheated by their broker and the whole system and so they are angry."

That anger makes the house harder to sell and certainly won't help the neighbors, but spite isn't the only dangers a neighborhood foreclosure might face.

Elias says empty homes attract vandals looking to make a quick buck and he fears the trend will increase as the thieves become more organized.

So what do thieves find in an empty home? Copper.