As a result of both decreasing home values and increasing legal fees, some banks are deciding to not take possession of properties in foreclosure (see New York Times article). In addition to legal fees, homes in foreclosure are seeing increasing maintenance fees, due in part of vandalism and neglect. The problem is that once the bank walks away, the name of the homeowner is still on the title, making them responsible for maintaining the home. Even if the home is to the point of being demolished, the homeowner may be responsible for the cost of demolition and clean-up. It looks like the banks are indeed getting some of their problem loans off the balance sheet, but this may not be the way the Fed and Treasury had in mind.

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