In hard hit areas such as Detroit and Chicago, housing prices have collapsed to the point that it makes no financial sense for banks to try and sell foreclosed property.

Increasingly, banks are walking away.

Via the Chicago Tribune:

Abandoned foreclosures are increasing as mortgage investors determine that, at sale, they can’t recoup the costs of foreclosing, securing, maintaining and marketing a home, and they sometimes aren’t completing foreclosure actions. The property, by then usually vacant, becomes another eyesore in limbo along blocks where faded signs still announce block clubs.

The federal government forced banks to lend to people who can’t afford it. The banks are left holding the bag and determine the properties are worthless and walk away. Leaving a huge mess for local governments.