Gimme Foreclosure

Thanks to the combination of a historic glut of high-end condominiums with the worst recession since the Great Depression, Greater Miami may one day lay claim to inventing a new real estate hybrid: the affordable luxury condo. But we’re already making minor real estate history, owing to the convergence of two other socioeconomic phenomena—rampant home foreclosures and ever-flourishing homelessness. Take Back the Land, a group of about 15 Miamians, has turned calamity into opportunity, though, by carefully moving homeless families into foreclosed houses in and around Liberty City and Little Haiti.

“For us the big issue is that it’s morally indefensible to have vacant homes,” says TBTL director Max Rameau. “The United States is signatory to at least seven treaties which state that housing is a human right.”

Rameau likes to cite a couple of statistics. There were 4,700 foreclosure-related evictions in Miami-Dade County in the first quarter of 2008 and about 4,500 homeless people at the time. Are you thinking what he’s thinking? Yep, we could have ended homelessness here by now. “The problem with that,” he says, “is that no one gets rich by moving poor people into houses for free.”

And so they squat. So far TBTL has moved nine families into empty houses. They require their squatters to turn on and pay for utilities. Five of the families have moved on, but four remain in properties they technically don’t own.

Times are so tough that, amazingly, even our toughest overseers of law and order sense the virtue in allowing clean, orderly squats. “What social good would be served by arresting the mother and then separating her from the children?” Miami police chief John Timoney recently told an ABC News reporter covering a TBTL move-in

Also providing TBTL cover are those famous aberrations that caused the real estate crisis: mortgage-backed securities. “The bank doesn’t hold the mortgage. The mortgage is securitized, which means no one actually owns it,” Rameau asserts. “So how do you get those hundreds of investors together to tell them, ‘Okay someone’s on the property. Do you want them to move or not?’?”

A trust might actually lose money by evicting squatters from a Liberty City house. TBTL moved a homeless mother and her four children into a quaint 1941 one-story 2 bedroom/1 bath on NW 75th Street in Liberty City. “They took great pride in the place, kept it very neat and very clean,” Rameau says. “Then some real estate agent came by, exploded, ‘Oh, what are you doing here? I’m selling this place!”

The mom didn’t want trouble so TBTL relocated the family. The abandoned house, owned by a troubled bank in California, sat empty for many months. “It’s completely trashed,” Rameau laments. “The bank probably lost $30,000 or $40,000 on the house because all the electrical wires were taken out. The windows had been broken. The plumbing pipes have been destroyed inside the house.

Are you thinking what I’m thinking? That could have been avoided, if someone had signed up the squatters with a really aff ordable mortgage. TBTL’s mission stops at placing homeless families in vacant houses, though. An organization with greater means should help the squatters become homeowners, Rameau says.

So, here’s an opportunity for some real estate wizards to invent a historic new financial product fit for this recession.

They could call it Squat-to-Own. It won’t make anyone rich; Rameau estimates the typical TBTL family could probably pony up $200 per month for a mortgage payment. But that’s more profitable than losing hundreds of dollars per month from vandalism and other forms of wear-and-tear on an empty house in a Miami ghetto.

Another scenario might make even more sense for all concerned, since the market value of these squatted houses is a pittance anyway. Banks could do what many American homeowners have had to do of late: walk away. And give a homeless family a home.