By Howard Goodman
Florida Center for Investigative Reporting

Thousands of the vacant properties that blight South Florida neighborhoods are owned by the world’s wealthiest banks, which often drag their feet on foreclosure proceedings because they see little profit in the houses.

And while the paperwork lies idle, the houses sit abandoned and unclaimed except by vandals and vermin.

So says a comprehensive investigation by the South Florida Sun Sentinel.

These are the same banks that made many of the reckless loans which fueled the housing boom of the mid-2000s. When the market crashed and the economy crunched, thousands of owners had to walk away from houses they could no longer afford.

The newspaper found that the lenders, too, are essentially walking away from these properties. As the journalists write: “The remaining equity in the properties is deemed inadequate to cover the banks’ costs to reclaim title and maintain, refurbish and sell them.”

The months-long investigation by reporters Megan O’Matz and John Maines “uncovered case after case in which banks launched foreclosure lawsuits but then stalled or avoided taking ownership. In effect, the banks legally sidestepped responsibility for the empty homes, causing great harm to neighborhoods.”

Since 2007,  10 cities in Miami-Dade, Broward and Palm Beach counties have filed more than 10,300 property code violations against banks, the Sun Sentinel found.

Some of these vacant houses are menacing. In Greenacres, a woman who lives next door to one was plagued by rats from the abandoned duplex attached to hers; the rodents gnawed her kitchen counters and cabinets.

And some are out-and-out dangerous. In October 2009, a toddler in Miramar walked into the murky backyard pool of the abandoned house next door. And drowned.

Most of the properties are in lower-income, mainly minority neighborhoods — “areas where people with poor credit and insufficient income secured high-cost, highly leveraged mortgages, and left when they couldn’t meet the payments.”

O’Matz, a veteran investigative reporter, and Maines, a specialist in computer-assisted reporting, are to be commended for focusing on a serious quality-of-life issue for South Florida — the gaping physical wounds to neighborhoods that are still evident from the housing collapse:

In its investigation, the Sun Sentinel visited vacant properties in foreclosure limbo where windows are broken or boarded, refuse is strewn on yards and swales, and doors are papered with official warnings to keep away because a house has “no sanitary facilities, no electrical service” or is “unfit for human occupancy.”

The report points out that foreclosures in Florida average 844 days to complete, according to RealtyTrac, a foreclosure tracking firm. That’s well over a year longer than the nationwide average of 348 days.

O’Matz and Maines explain:

Florida courts have been overwhelmed in recent years by the avalanche of foreclosures clogging the system. The processing of cases ground to a standstill for a time beginning in late 2010, over a scandal involving the improper verification of bank documents by so-called “robo signers.” Individuals filing for bankruptcy also freezes the foreclosure process.

That all has contributed to the limbo problem.

But over the past few years, lenders also have been walking away from foreclosure actions involving homes with low market values, after their cool-headed calculation that the homes cannot resell for enough to offset the costs of foreclosing, repairing, maintaining and marketing them.

In other words, the banks have cut their losses.

“It’s immoral if nothing else, what they’re doing to evade their responsibility,” said Raquel Diaz, code compliance manager in Lake Worth, where police say clusters of vacant homes have led to increased crime.