Sounds like the owner might have been underwater on the mortgage, decided his best bet was to keep collecting rent and stop paying the mortgage, and hand over t

Sounds like the owner might have been underwater on the mortgage, decided his best bet was to keep collecting rent and stop paying the mortgage, and hand over the property to the bank, unless by some miracle they gave him a mortgage modification. It's a messed up situation. A mod to reduce the mortgage amount in line with market value might have been better for everybody. But another wrinkle is the bank might have sold the mortgage and just be servicing it on behalf of bondholders, and there's no way to get all the bondholders to agree to start doing mods. And it's a bad precedent to do mods every time the borrower thinks he's underwater, even if he has the ability to pay. Even if the bank still owned the mortgage, they are not well equipped to deal with situations like these. They're not professional property managers who can take over the property and deal with a renter. It's also a PR nightmare if they foreclose and then try to kick someone out so they can sell it at full value. So they end up selling it at a lowball price to someone who is willing to do the dirty work. I think the writer might be confused about TARP. Mostly TARP was buying stock in the banks, most of which was paid back. There were some programs to buy and guarantee assets. I guess if TARP had somehow bought that mortgage it could apply. Not saying TARP was a great idea or not, just that it wasn't a blank check for banks to no longer care if they got value from the property. The latest administration proposal is to let mortgage owners refinance no questions asked, even if they're underwater, if they've been paying on time. That seems like a good idea. http://www.calculatedriskblog.com/2011/10/few-comments-on-harp-refinance-program.html http://www.calculatedriskblog.com/2011/10/few-comments-on-ha...