It's already illiquid - the current mortgaged owner has fled without putting the house on the market. If it were a case of just a few houses, as in the normal economy, I'd agree with you, but there are a whole shitload of houses in similar situations in the United States right now. This squatter is a better neighbor than a crack house. (Unless he decides to diversify.)
If the neighbors really want a say in it, they're free to pony up the money, track down the owner, and fight their own court battle to buy the place and then rent or sell to somebody they'd rather see there. It would probably be pretty cheap, actually, even with legal fees. But people always find it easier to say "You can't do that" than to say "We can do that."
But if the owner didn't pay, the mortgage company - and by extension, whoever got the rights to that debt - can foreclose on the house and sell it, no? I assume whatever company know owns that mortgage wants to recover their losses by selling it ASAP.
Maybe. If they still have the paperwork. And if they can sell it. I mean, I got my house for $8K, of which the bank got $4K, on an outstanding mortgage of something like $56K. And there are lots of vacant houses - the city actually demolished one last winter that was owned by Deutsche Bank because they hadn't even responded to letters from the city.
And that's for the mortgage holders that are still in business. This one isn't. Presumably someone holds their assets - but my guess is they're in even more frightful a mess.
You're assuming the assets are contained by one owner. Most likely though the asset is shared by a number of financial institutions and will be attempted to be split by selling the house, but none of the new asset owners are willing to finance the split of an asset that may not show returns (like if the house is sold for very little money, or not sold at all).
This is also assuming that the company went bankrupt by being worth less than their total loans. It may have been a case of the company simply loosing income and being unable to pay their financiers, even when the loans were worth less than the total value of the company. In such a case I don't know what happens to the "left overs", but I assume that they would belong to the shareholders.
If the neighbors really want a say in it, they're free to pony up the money, track down the owner, and fight their own court battle to buy the place and then rent or sell to somebody they'd rather see there. It would probably be pretty cheap, actually, even with legal fees. But people always find it easier to say "You can't do that" than to say "We can do that."