The Ugly Face of Foreclosure (Cont'd)

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And they have less money to pay for it because foreclosures cause tax collections to suffer. Not only do foreclosures, abandonment and demolition take properties off the tax rolls; the remaining homeowners often want their assessments lowered and taxes cut to reflect their plummeting property values.
"More than 64,000 people in Cuyahoga County alone filed an objection to their assessments this year because their property values have dropped," Rokakis said.
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And they have less money to pay for it because foreclosures cause tax collections to suffer. Not only do foreclosures, abandonment and demolition take properties off the tax rolls; the remaining homeowners often want their assessments lowered and taxes cut to reflect their plummeting property values.

"More than 64,000 people in Cuyahoga County alone filed an objection to their assessments this year because their property values have dropped," Rokakis said.

Home Price Forecasts for 100 Markets

And the actual owners of the foreclosed properties -- the investors who own the loans -- may stop paying taxes as well. Said Branchatelli, "They may send someone around to take a look at the place, who decides it's not worth even going through the foreclosure process. They may just take a powder."

Because of unfiled paperwork in many of those cases, houses may stay in limbo for months, deteriorating further until they're completely unsalvageable.

Rokakis himself recently experienced, secondhand, the pain of foreclosure by attending the sheriff's auction of his boyhood home. The outstanding balance on the mortgage was $85,000 but the house sold at auction for just $19,000.

As he walked through the living room before the sale and thought about how his parents raised seven kids there, he overheard buyers talking about what they would do to the property: rent it, flip it, raze it.

"It was a bummer," said Rokakis.

Contemplating the next few months of increasing foreclosure activity leaves him no happier. "Our subprime delinquency rate is 25 percent right now," he said, "and rising. The day may soon come when it's 50 percent."

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Scenes from a bubble: The buyers

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