Cheap foreclosure houses for sale are growing in numbers every day as more and more houses and development projects go into foreclosures. One of the latest victims in the current economic downturn and foreclosure crisis is a townhouse development project in New Jersey.
The Riverwalk townhouse units were built with the purpose of bringing in new homeowners, new development, parks and infrastructure to the New Jersey city of Rahway. However, as the economy plunged and unemployment rate rose, only two thirds of the townhouse units were sold. This resulted to the developer’s failure to pay its tax bills and reneging on its promised street work.
The city government now wants to repossess the unsold townhomes. However, it was beaten by the Bank of America which sought to collect on the loan amounting to $11.8 million. The bank claimed that the developers of the townhouse project defaulted on its mortgage.
The city of Rahway’s chance to collect on unpaid taxes was limited when the foreclosure process started in Union County Superior Court. But the city hopes to collect the unpaid taxes from the Bank of America which filed foreclosure proceedings on 19 unsold townhome units.
Industry experts said that the cheap foreclosure houses for sale are increasing not just in the city but in other parts of the county. And a great amount of these foreclosure properties are from development projects.
In the case of the Riverwalk townhomes, the developer owed the city money for unpaid taxes and for road work that it failed to do. But the city government said that the tax liens of the townhouses will continue to apply on any entity that will purchase the townhomes through foreclosures.
Industry experts said that a city government has the right to seek for payments for back taxes first, adding that taxes come before the loans. They expect the bank to be easy to deal with compared with the Riverwalk developer who refused to return calls from the condominium association or the city.
Under the agreement made in 2002, the Riverwalk developer was to construct 86 townhouses. The agreement also includes installation of sidewalks, street paving, sewage work and landscaping.
In the meantime, tenants of some units in the Riverwalk development are concerned that the presence of cheap foreclosure houses for sale would affect the values and prices of their properties.
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