Pipeline

Snakes in a House

Repossessed homes are often a target for vandals. But one such house on the market in Idaho has what amounts to a unique built-in security system.

The five-bedroom, two-bath home has become widely known as the "Idaho snake house." A report in the Rexburg Standard Journal last week said the most recent owners of the home, Ben and Amber Sessions, were told by their real estate agent that the previous owners fabricated a story about the house being infested with snakes because they did not want to pay their mortgage.

But it turns out the story was no tall tale.

After the Sessionses began seeing a number of garter snakes around the house, they searched online for information. A query for "Idaho snake house" turned up a TV news report about their home and the ordeal the previous owners had faced.

The Sessionses have since filed for bankruptcy, and JPMorgan Chase & Co. has seized the home, the report said.

In December, an inspector estimated that 400 to 500 snakes were in the house. The latest assessment is that there are thousands, the report said.

The house is listed at $109,200, but if it weren't for the snakes, the listing agent estimated, it would be worth about $175,000.

"The real estate agent is disclosing the issue to potential buyers," JPMorgan Chase spokesman Tom Kelly said by e-mail.

Garter snakes are considered harmless to humans. But they are known to secrete a foul odor when alarmed. Who needs guard dogs?

Bank 'Walk-Aways'

Mortgage servicers have refused to complete foreclosures on thousands of vacant homes in Chicago because they do not want to pay the cost of maintaining the homes, according to a report this month from the Woodstock Institute, a local nonprofit.

The companies' actions, or inaction, circumvent local ordinances that require properties be registered with the city. But Chicago lacks the resources to identify all the vacant homes and impose even minimal $500 fines on the servicers, so the properties stay vacant, causing blight, mostly in minority neighborhoods, said Geoff Smith, a senior vice president at the institute and the report's co-author.

Nearly 2,000 properties "are in limbo because of servicer walk-aways," Smith said in an interview Wednesday. After analyzing data on vacant properties, foreclosure filings, auctions and property transfers, Smith found that servicers have abandoned foreclosures on 1,896 homes for more than a year and a half. "They don't want to take ownership of the properties because there is a cost associated with maintaining and securing them."

Nearly 60% of seized properties, or 2,558 homes, have not been registered with the city because banks and investors do not want to make the required repairs, he said. Instead, taxpayers will foot the bill: Chicago is expected to pay out $36 million to maintain the properties, including possibly demolishing some of them, Smith said.

Such "red flag" foreclosures are concentrated in black and Hispanic neighborhoods — more than 70% are in black communities, compared with 6.5% in predominantly white communities.

The nonprofit is working with the city, trying to get a list of addresses so local officials can hold servicers accountable for maintenance. Chicago is also considering an ordinance that would shift responsibility to the entities that hold liens on the properties.

"Adding preforeclosure accountability would give servicers an incentive to keep people in the property," Smith said. "If you add in costs that are significant enough, they may choose to make loan modifications more viable."

Hint: Not 'Garbage'

Wall Street trading floors are not known for decorum. But it is striking how often a particular profanity turns up in those internal e-mails that become public after markets crash.

This month, court papers revealed that in August 2006, Nicholas Smith, a vice president at Bear Stearns & Co., had referred to SACO 2006-8, a pool of mortgage loans that the firm was securitizing, as a "sack of" manure. But he used a four-letter synonym for manure, and not the one that rhymes with "slap."

The e-mail was disclosed in an amended complaint that Ambac Assurance Corp. filed in July. The U.S. District Court for the Southern District of New York unsealed the filing on Jan. 14. (Ambac, a bond insurer whose parent company went bankrupt last year, is suing EMC Mortgage, a former Bear unit now owned by JPMorgan Chase, in a case that dates from November 2008.)

Smith's e-mail brings to mind a now-infamous televised Senate hearing last year in which it came out that a Goldman Sachs Group Inc. trader had described a collateralized debt obligation using an adjectival version of the same scatalogical obscenity. Sen. Carl Levin taunted the Goldman witness by repeating the word several times, and the company later banned profanity from e-mails.

And of course there is Henry Blodget, the dotcom-era Merrill Lynch analyst, who recommended to clients an Internet stock that he privately called a "POS." To be clear, he was not using the shorthand for point of sale card-swipe terminals.