The Wall Street Journal says that about half of foreclosed homes nationwide have “substantial” damage ,much of it inflicted by bitter former homeowners who tried their best to destroy the property before being forced to leave.
The stucco subdivisions of Las Vegas are caught up in the nation’s foreclosure crisis. These days, bankers and mortgage companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. Real-estate agents estimate that about half of foreclosed properties to be sold by mortgage companies nationwide have “substantial” damage, according to a new survey by Campbell Communications, a marketing and research firm based in Washington, D.C.
The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. A ransom? A bribe? “Yeah, somewhat,” says John Carver, an agent specializing in foreclosed homes for Prudential Americana Group in Las Vegas. But “you lose a house, and then you get some financial help — it’s a good thing…It’s a win-win for both parties.”
The stories of financially ruined homeowners being paid to leave quiety are heartbreaking and mind-boggling at the same time. Here’s one:
Late last month, Mr. Carver left a letter on the door of a house with a red-tiled roof in Henderson, abutting Las Vegas. “I may be able to offer you cash to vacate the property,” the note said.
The owner, a 43-year-old man with two children who spoke on the condition that his name not be used, says he bought the property in 1993 for $140,000. Three years ago, he says he had the house appraised for $440,000 and took out a $207,000 home-equity loan to pay off credit-card bills and buy his wife a new van. His initial payments were an affordable $1,800 a month.
He fell behind, however, after he went through a divorce and his landscaping business faltered, just as his interest rate was rising. The man worked out a payment plan with the bank and borrowed heavily from his father, but, including penalties, his monthly payments rose to $4,000, he says. After two months, he says, he ran out of money, and the bank foreclosed.
He called Mr. Carver after receiving the cash-for-keys note, but was left cold by the bank’s initial $500 offer to leave the house soon, intact and broom-swept. “If I stay here it will cost them a lot more money,” both men remember the former owner saying.
The man says he was just pointing out that eviction is expensive for the bank and says he had no intention of damaging the house. But he had “pushed the right buttons” for Mr. Carver. “He didn’t actually come out and threaten the property in any way,” Mr. Carver says. “But I assumed that he probably wouldn’t be too happy if he got evicted and locked out.”
Mr. Carver consulted with the bank and upped the offer to $2,800.
“Better than nothing,” the owner responded.
Last week, Mr. Carver went to the house, found it clean and whole, and handed the man a check. “Everybody walks away somewhat happy,” Mr. Carver said. “I guess.”
Buyers’ Revenge: Trash the House After Foreclosure [Wall Street Journal]
(Photo:gruntzooki)
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@Craig: I’ll bet his credit card debt was in the normal $25-$40K range (lol). The rest of the money went for silver-toed working boots and titanium shovels for his landscaping business, and that’s why his wife had to divorce him. Or maybe his wife spent it on lipsticks and hatpins, and that’s why he had to divorce her.
@Adam Hyland: Good point. Can someone who knows the details enlighten us?
@Adam Hyland: “police enforcement is relatively costless”
I can tell you from doing evictions that it’s a royal pain in the ass if you have to get the cops involved. It’s low on their list of priorities and it makes the entire price take three times as long.
This will obviously vary by where you live and what your PD contends with — ours has a lot of active crime to deal with before handling evictions — but it makes it so. slow.
@Eyebrows McGee: Don’t confuse financial responsibility with “goodness” – I’d kick the prodigal son right in the nads if he were in my family.
@Eyebrows McGee: “price” = process, I’m sorry, I have the worst headache.
@Blueskylaw: The guy in the story didn’t threaten to trash anything. He said it would cost more to remove him forcibly than the $500 they were offering him. He could have been talking about eviction costs and court fees, for example.
@clickertrainer: It’s amazing the work people will put into this nonsense. Better to spend the time reading a book on how not to F up the next time out, no?
Shouldn’t these people who just lost their homes spend their time WORKING or FINDING A JOB instead of spending hours childishly trashing a house? I can understand removing appliances and maybe expensive bathroom faucets and the like, but why trash a house because you were unable to afford it??
@GoldHoops: Well, that’s because a lot of these people WERE irresponsible. $1.1 million for a 1100 SF ranch built in 1970 – does that make any sense at all? It wouldn’t to me, no matter what the people on HGTV might tell me. I tell ya what; if I had a house like that where I lived for awhile, and somebody told me it was worth over a million bucks, I’d have asked him if he had any buyers. These same houses were selling for no more than $150,000 not all that long ago, and a million bucks will pay rent on a very nice apartment for a REALLY long time no matter where you live.
Somebody got filthy stinking rich from this bubble, but it wasn’t you or me. We, at least, can hold our heads up high because we didn’t try to milk our houses for HELOC cash like a lot of people who WERE irresponsible.
I completely agree with you. My story is similar, although haven’t gotten more than a month behind so far. I bought a house I could afford, then the property taxes sky rocketed because property values went up. Then our gas/electric company raised rates to where now my monthly bill is double what it was 18 months ago. Then our delightful governor decided property taxes and sales tax wasn’t enough so he raise those also. A house I could afford 18 months ago with a few hundred a month to spare now takes every bit of my income and I pretty much have to take turns on which bills get paid every month. I financed at a fixed rate for a small 3 BR 2 BA house, not a McMansion by any means. With our sales tax being raised, and gas prices forcing everything to cost more, I will probably be one of those getting foreclosed on before too long.@GoldHoops:
When I had to evict renters, they broke a few windows, but the biggest pain was I had to pay to move and store their goods for three months (required) and the doofus had a truck and a half of stuff to deal with. Gladly wrote that check, though.
Hmmm . . . if interest rates are at historic lows, then the ONLY direction mortgage rates can move is up.
America is one of the very few places in the world where you can get a 25 or 30 year mortgage with totally fixed rates – folks in other countries are rightly very jealous. For the last 6 years, those rates have been incredibly low – so getting into a fixed mortgage has been a steal – and if you couldn’t afford one, then you simply could not afford that house. Of course, as time went on, the low rates led to high prices…
@Eyebrows McGee: Right, but in comparison to push for civil relief it isn’t too hard to make some poor bank emloyee ride the cops to get them to help. and what I’m talking about is after the fact relief, not removal. I agree that removing a sitting home owner in a foreclosure situation is probably as sticky as an eviction. But getting the cops to chase down and lock up someone who broke something is much cheaper than suing them for the cost of damages.
If the banks were legal owners when the property damage occurs, this is a pretty simple solution, at least for the banks.
i like to think of it this way… if the banks would somehow allow people to keep their houses, then the people could keep their jobs and keep paying the bills… right?
rent always seems to be going up, i have no idea where these people who got kicked out are going to find a place to stay. so many of these new condos going up ‘in the low 300s’ what? really? where are the min wage staffers supposed to live?
@Buran: Prove they damaged the house while it was the bank’s property. They could have done it while it was still their property.
And they don’t have the money to pay for their own house, where do you think they will pull the money out of to pay for the damage? Their ass?
@Rando: Different states, different rules. One, eviction is not a over night thing. The renter has to file for eviction in court, and prove that you haven’t paid. Then the rentee gets served and then evicted finally. But that’s for renting. It’s different for owning.
@Adam Hyland: You would just need to prove it happened when the Bank owned the house. Most damage doesn’t have a decay time like human bodies (no e.t.d.). Just fire damage, and that’s a “It’s hot/still warm/no longer warm” situation.
@ChuckECheese: He was also thinking how much the bank would lose/he would have to pay in rent if he stayed those 6 months.
@loganmo: any borrowers that Abandon their pets and leave them to STARVE TO DEATH, need to DIE IN A FIRE, but be locked in a room with no water, food or toilet for two weeks before.
People that leave their pets because they dont want to deal with what to do with a animal that has given them free unconditional love only show that they are spinless bottom feeding walking brown turds that spread nothing but feces on the earth.
They should be put to sleep (the people not the pets)
sory Loganmo I hit wrong quote button by mistake
What part of “Adjustable” in Adjustable Rate Mortgage do people not get? You’re a goddamned IDIOT if you get an ARM when interest rates are low and the Fed is perpetually considering hiking them up. Back in the 80′s when rates were through the roof, an ARM Made perfect sense because you avoided the problems of refinancing when rates started coming down.
However, I can understand when shit happens. You get hit by a DUI, or your shrew of a wife leaves you and takes most of your paycheck with her. You can’t really plan for those types of incidents because nobody really wants to think about them…and if they do they got issues. However, I have no sympathy for morons that get an ARM for twice as much house as they need and can actually afford.
@MrEvil: Uhhh, the part where most people don’t REALLY know the determinants of interest rates. Or the part where most people, even on this site, couldn’t tell me how the Fed sets interest rates without a trip to wikipedia. Or the part where most long term interest rate predictions are bunk. Or the part where most predictions in the late 1990′s were of perpetual growth just as most predictions of interest rates in this decade were that they would remain low for a long time to come.
Every bubble has with it the people who bray loudly that the rules have changed. When those people are the ‘advisors’ to homebuyers, what are we to do? If I’m a bricklayer, how should I know that home prices won’t always go up or that interest rates may be functionally bounded around the mean (they probably aren’t, but w/e)?
It isn’t abdication of responsibility to assume that some details are outside your control or scope of knowledge.
It’s hard to have sympathy for somebody insane enough to take out a home equity loan of $207,000…which is GREATER than the $140,000 mortgage, btw.
Why would anyone not expect childish behavior from people who couldn’t do basic math?
@Wormfather: I’m 110% with you!
@SuffolkHouse: Except it’s not their home. It’s the bank’s home.
@51tiggy: Exactly what I was thinking. Poor animals!!!
These stories sound like urban myths, MAYBE based on a couple of cases; somebody should check out the facts on these. I can see people not wanting to clean up when they move under these circumstances, and of course there was wear and tear while they lived there. Probably some histrionics involved, a few threats to do such things, and some reporter ran with it. That seems to be the quality of “news” items these days.
B-B-But they ain’t making any more land!
@greensmurf: & @ Eyebrows McGee:
I am the guardian of several cats, all from shelters. I also volunteer at an animal shelter. I see cats that come into the shelter identified as “STRAYS”, who have been nuetered and declawed, and are as sweet and friendly as can be. Sure, the “street” had all those surgical operations preformed. I have seen cats that were abandoned outside the shelter when it was closed, even in the dead of winter. Some cats now who are arriving in the shelter were found locked inside of empty apartments and houses. I agree with both of you that the humans, and I won’t call them human animals as it’s an insult to the animals, should be drawn and quartered. My dream is to win a 50 million lottery so I could buy a lot of land and build a 30 room house so I could give happy homes to all the animals in the shelter. But the best I can do now is to give them lots of love and attention, and pray that someone adopts them soon.
Simply astounding. ‘I signed a contract that I didn’t understand which ended up being more than I could afford and now that I’m being foreclosed on I’m going to destroy the house that the bank loaned me the money to buy.’
I find it despicable that so many brokers did shady loans for people – but where is the personal responsibility in all of this? I think the banks should work more with mortgage holders to keep them from losing their homes – but at what point do we stop holding people’s hands?
Luckily, I learned on relatively minor things (gym contract, whole-life insurance policy, etc) that you get burned when you sign something you don’t fully understand. Why don’t more adults get that?
In one corner, you have some poor person who was practically scammed (I’d like to have anyone here take a standard mortgage contract – often a large fraction of an inch thick – read it for 48 hours, then pass a quiz on the terms). In the other corner, a faceless, soulless corporation that the main contact point is someone with an indian accent, except when they call you and violate the various debt collection laws.
Before, the banker knew the borrower. Sometimes they even attended the same church. So the banker would be more prudent (stingy) to avoid bad scenes sometime later. And demanded 20% down in a flat market. If something had to happen, it would be person-to-person. Not CDO tranche owners collective v.s. struggling homeowner.
Corporations thought the social contract was less efficient and they were right. But destruction is also far more efficient than building.
There was an item an hour ago on Chicken Noodle News about foreclosures in Florida.
The pricks evicting people were showing up with no notice and literally throwing people’s property out the door, damaging much of it. Sending a piece of paper without a fixed date of eviction is no notice. Small wonder some of the people being evicted were shooting at the pigs knocking on their doors. (Shooting may not be legal, but it’s understandable given the emotions of the situation.)
Give an exact date and a reasonable solution to the borrower, and they’ll be more cooperative.
@Adam Hyland: “If the banks were legal owners when the property damage occurs”
Oh, yeah, sorry. The bank typically isn’t, at least in my state. It’s sort of like a wedding — you get plenty of notice of the date in advance and it’s not like it’s a surprise, but until it actually arrives, nobody’s married, and the bank doesn’t “own” the house.
And like a marriage there is a transitional stage between the announcement of engagement and the actual marriage where we all act partially as if the marriage has occurred (it’s terribly bad manners to attempt to date the bride), but nothing legal has yet occurred. Once the foreclosure process has been set in motion, yeah, you’re in a transitional stage where the outcome is clearly known — but until it actually arrives, the legalities don’t change. (At least in my state.) It’s certainly immature and bad-mannered, possibly immoral (if you want to apply that to business dealings), but not illegal.
Also, when renters trash the place, it DOES still belong to the owner the entire time, but it’s still often too much hassle to pursue criminal charges. (And at least with a civil complaint, you might get wage garnishment or something — but typically unless you’re evicting college students whose parents co-signed, you’re not evicting folks whose wages are going to be worth garnishing, although it depends on filing costs. For a $40 filing cost I’d do it anyway; for a $290 filing cost, I’d say screw it.)
@ginnylavender: “These stories sound like urban myths, MAYBE based on a couple of cases; somebody should check out the facts on these.”
Dude, it’s happening across the street from me. It’s been happening for years. Ask Realtors who deal in lower-end properties, or your local slumlord, or attorneys who do evictions. (Or anyone who rents to college students — there are always some bad eggs in that basket, just as college students are often your BEST renters.) It just wasn’t NEWS before the big sub-prime foreclosure mess.
I myself have handled evictions (not foreclosures) where the departing renters trashed the shit out of the place because they were pissed about being evicted after not paying their rent for 9 months and dealing crack out of the rental property. I also helped with an eviction that ended up with the renter in prison because he pulled a gun on anyone who came to evict him. Rent 15 months past due by the time the cops tossed him in jail. That place was not in great shape either.
@SuffolkHouse: You clearly have no understanding of a) the crisis this country is facing, b) morals, and c) the fact that the fault lies in the hands of both banks and consumers.
Wait wait wait, people are locking pets in their houses to be forclosed. Call the cops, sounds like animal cruelty to me. Bastards!
Screw everyone who says “punish people who make stupid decisions” and lumps us all into that group.
Some of us have very (seemingly) secure 240000-dollar a year jobs which suddenly just…go away, with no prospect of replacement. Some have to live on their 401K, which we WERE proactive enough to have, while we look with futility for another job which justifies our years of post-secondary education and pays our considerable debts.
Some of us list our homes for sale for well over a year and break our balls to keep up with payments, even selling any non-essential possession that doesn’t belong to our kids, because we understand what foreclosure does to a credit report…but can’t sell it because we’re not able to drop the price to a competitive level, due to lack of equity. Because, again, when we signed a contract, we thought we’d have a job for a while.
Some finally succumb to foreclosure and bankruptcy because circumstance has dictated it, and while we found another job it does’t pay but about 20% of what the one we had did, and we left the house in immaculate condition precisely because we understand the concept of the difference between resale and mortgage principal being taxed as income. Not everybody who’s foreclosed upon has a bonfire in the living room, an orgy on the front lawn, has a truck on blocks out front, and paints a beer-bottle target on the wall before they leave.
Some aren’t stupid, haphazard or short-sighted at all. Some are just unlucky.
So, yeah…back off.
What about living within your means? Is that a thing of the past?
My next door neighbor was just evicted… house is in complete disrepair, but what is worse is that we now have a bunch of weirdos living in it. These are ppl that the ex-owners rented a room to. They moved in with a bunch of friends and party all day. I’m afraid to do anything for fear of them vandalizing my house/cars. Sucks arse!!
@Buran: And if the bank’s kicking you out, it’s NOT your house anymore, people…
Technically it never was your house. It belonged to the bank the entire time. Unless you paid it off and hold title, but then nobody is going to foreclose on you…
Are you people even serious the banks seek you out, rapes you (as if all of you read every word in your mortgage contract)then has every right to take it away without even trying to work with you then have the nerve to bribe you not to trash the home…some of you idiots actually go for this. I have an idea why don’t you head on down to your local baqnk hand over your first born(for what they are worth?)and go live in a van down by the river, of course after your finished broomsweeping the house the bank took. All home prices are going to crap either way so a little vengeance helps some sleep at night and belive the bankers are sleeping..in the cozy beds you helped pay fpr…Wimps