Facing Foreclosure Some Owners Trash The House Before Leaving
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 stories of financially ruined homeowners being paid to leave quiety are heartbreaking and mind-boggling at the same time. Here's one: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."
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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Comments:
$207,000 either buys one hell of a van, or pays of a LOT of credit card debt.
I still blame the victims for this, actually, I blame everyone.
READ THE DAMNED CONTRACT!
Now if you'll excuse me I have to go open a few retail credit cards...oooooh 12 months no interest, I can pay that off in at least 18 months, how bad could the interest be?
I read about one such trashing - where the owner, or 'someone' locked 4 grown hogs inside the house.
So, lets see. You owe the bank a bunch of money that you cannot pay. The way the bank is going to "forgive" that is by selling the house for what they can get. But, you decide to "trash" the house to punish the bank.
No, what you really did is devalue the house and the bank is going to need to spend cash to get it into a sellable condition, something that they'll offset the proceeds of the house against. Yeah, really smart.
Personally, if someone does this to a house that is being foreclosed on, they should be charged with vandalism or worse. And we wonder why these Americans were in these situations in the first place - they've been acting like children.
people are dumb.
Um ok. So you're getting foreclosed, which sucks. This is not the posting in which to debate whose fault that is. But when you trash the place before you leave, all you're doing is further reducing the value at which the mortgage holder will be able to auction/sell the property. Therefore increasing the deficiency balance you will owe the bank. Therefore decreasing your chances of being able to crawl out of this financial hole.
Scary times.
I'm confused, wouldn't people want the highest sale value after foreclosure? If the house sells for less than what you owe, don't you still owe the difference?
To me, those owners are stupid... just burning bridges that some day they might need again.
They were stupid in the first place to take out the loan. (I bought a house about 2 years ago - and I was smart enough to take a fixed rate at a slightly higher rate since I knew I could afford it and should always be able to afford it.)
If the owners took a risk and lost, why are they mad? They could not stick with the terms they signed up for so they trash the house?
Stupid owners.
Huh? Another person got in trouble for living beyond their means? Crazy!
To me this kind of attitude just solidifies the notion that these people were petty and stupid to begin with. Don't expect me to feel sorry for you because you're an idiot.
In fact I'm going to go start a new Gawker Media Website called the...the...the...The Entrepreneurist. It'll mirror The Consermist site except explain how stupid things happen to stupid people when they make stupid decisions.
Upcomming features:
Taking it seriously, nope, "I'm outraged"
10 Confessions of a person who falls for anything a salesperson says
And of course The Worst Type of Customer in America Competition.
Unfortunatly, no one will ever visit my site because I cant even spell "Entrepreneurist" without looking it up.
In other words, I love what you do guys, but this sub-prime thing makes me feel nothing but anger at everyone involved.
It's really a lose-lose situation when the house gets trashed. The bank can file charges on the mortgager, but that will take years in court and it will still cost the bank thousands of dollars to repair the house.
I work in the flooring industry, and yes I do see a lot of pet stains on new floors. The customer does not like having a black spot in the middle of a floor, and sanding the floor multiple times ain't going to do it. So you have to rip it out completely, buy new wood and reinstall....your looking at a good $8-10 a sq ft to do that. So lets say they did that in the family room and it's 500 sq ft....thats 5 grand just to replace a floor, never mind anything else that happened.
Instead of taking a 20k loss on damage done to a house, they would rather limit their loss to, in this case, $2800.00. Sounds like a preventative cost to me....
If I was the bank, I would do the same thing.
@Buran:
I understand the law and order approach, but if these people have exhausted their finances paying out interest and penalties, Exactly what is the bank going to get back?
I don't understand why people feel bad for others that have been foreclosed on. These people made a really bad decision to overextend themselves. It is not the banks job to let them off the hook or the governments job to save a bank that goes broke passing bad loans.
People/companies will never lean if they are bailed out of their own bad decisions.
@coan_net: I wonder if the banks bother to make a note in their credit reports that they trashed the home? That could really come to bite them in the ass if they somehow got off their asses, started to think, and by some miracle got their act back together. I know the actual delinquency will stick around for 6-7 years, but are any note or comments permanent?
I've never understood this either but it takes all kinds. I've heard of people trashing the place (cause it's obvious that it's the BANK'S fault that they took a loan on something they couldn't afford). I've also heard of people that were embarrassed they couldn't live up to their obligations and leave promptly with the property in good condition.
The worst I've heard (aside from locking their pets inside, that is wrong on way too many levels) was people pouring cement down the drains and turning the water on so it would harden in the pipes. The best I've heard was people leaving the house in pristine condition with an apology note left behind.
Either way, a great time to buy as long as your understand what you are getting.
@Buran: If you trash it before the ownership officially changes to the bank, then there's nothing they can do.
I guess Mr Carver (from the article above) didn't get his wife a nice-enough van.
I was visiting my parents in Phoenix last week, and the foreclosure signs are starting to pop up all over the place.
I'd be afraid to see how badly those houses could be trashed, and made dangerous to set foot in (a few rattlesnakes or scorpions anyone?).
If you will lock pets in a house to trash it, you're sick. That alone is a reason to lock someone up. Poor animals being used as pawns in some stupid revenge tactic.
I love it. F the capitalist pigs who are kicking people out of their homes.
@milqtost: The forclosure market in Tax-achussettes isn't nearly that good to be honest. At least in California, some of the foreclosed neighborhoods are actually nice-looking. Here, there are lots of foreclosures, in such lovely neighborhoods like Roxbury, Dorchester, Lawrence and Lowell. I would feel safer strapping wads of cash and cocaine to my body and walking down a street in South Central LA than living in those places.
@chicagocooper: Not everyone made a poor decision when taking out these loans. There are those folks who may have bought a house and then 6 months later they get hit by a car, so now they're facing the mortgage plus about $20,000 or so in medical bills.
I recall my friend's home getting forclosed about a decade ago (in high school). His parents let him trash the house in a huge party, ripping apart the roof, creating all sorts of damage. What stands out in my mind is drawings on the wall of male genitals with wings.
I'm a little confused over how this is allowed to happen.
Last I checked, if you don't pay your bills you get evicted..immediately. Some states allow 30 days. After the 30 days, you're able to take over your property, no?
@chicagocooper: I do feel bad because some people just aren't as intelligent as others. I don't mean that to be some huge insult, it's just the truth. There are people who don't know that you can't trust everyone who has a big office and a nice suit. And it's sad that they have to learn the hard way.
But I think everyone should take responsibility for themselves and trashing the house is just juvenile.
@qwickone: Depends. In some places, mortgage loans are "non-recourse," meaning that foreclosure is the remedy and the lender cannot go after the borrower for any balance that may be left after sale.
@mduser: Wronggggggg. If you had a fixed interest rate at the begining, there is no reason for you to suddenly not be able to afford your house unless you made a bad decision. The answer is simple: Don't buy a fucking house unless you can afford it and have PLENTY left over each month.
Cement in the drains? That's rich.
Some people just never freakin' grow up.
@satoru: Agreed. Not every foreclosed house is a good deal. Some require WAY too much work or are in bad areas or were never good houses to begin with. But if you can filter through all that crap, there are also diamonds in the rough that can be had for a (comparative) song.
@Rando: I think it varies quite a bit from state to state. In Colorado you have to be so many months behind before the bank can start proceedings. Then they have to give you a few months to redeem the mortgage. I think all told someone can not pay for like 6-9 months before they are finally physically forced out. And that assumes the banks jump right on it - some delay things hoping the owner will catch up or renegotiate.
This really isn't surprising. I know some people that completely wrecked their house after they lost it. The damage was bad enough the house was condemned. I'd bet that a lot of metals such as copper and aluminum are being ripped out of those places by the former owners too.
They need a new category of "default" on credit reports if people do this.
@mduser: Sure that kind of thing happens, but you would assume that those kinds of delinquencies would be relatively random. Thus not be representative of a giant trend nationwide that we are seeing.
I think what we will be seeing more of though, is middle class people going into foreclosure due to the softening stock market. As company's stocks begin to tank, they will look to reduce costs, and thus begin layoffs. This will then bring in a new breed of foreclosures, that are more linked to the slowing economy than subprime lending.
Wait a second, locking your pets inside your home *after* vacating? That is, abandoning your pets to starve/squalor just because you're angry about your mortgage? I'm not particularly fond of domesticated animals, but that is a nauseatingly sick thing to do.
Trashing your forclosed home is childish and vindictive. Punishing an animal to do it is just plain cruel.
The evidence of that discontent was all over the carpet when Mr. Carver, of Prudential Americana Group, first visited a foreclosed house on Perfect Parsley Street. It didn't look like the usual waste from an abandoned dog or cat. "I would say 'ferret' from the way it's all along the baseboard, the way an animal would scurry," he said recently, leafing through photos of his most-memorable vandalized properties.
He's write about the scurrying, but ferrets almost always poop in the corner - corner of the cage, corner of the room.
Anyway, this kind of behavior is nothing new to most landlords. When you have to evict tenants, some of them are going to do this kind of thing.
I especially don't trust ppl with big offices and nice suits...
I've seen a lot of stories about foreclosed properties being found stripped of all the copper plumbing, because copper is going for so much. Heck, aluminum siding is also worth a pretty good amount.
I suppose if I was being foreclosed on, felt violated, and I could rip several thousand dollars in salvage out of my place before I got streeted, I'd probably do the same.
Does it make it right? Not really, but at least somewhat satisfying. Plus, who doesn't like to destroy stuff?
Pathetic...people get upside down in a house so they 'stick to the man' who screwed them over. What kind of logic dictates that you destroy an item you cannot afford?
Why are the hapless animals being punished, and where's the SPCA in all this?
@coan_net: Well, it always feels better to blame someone else for your problems. Same motivation behind many lawsuits.
Sorry, I meant - blame someone else for your stupidity.
@B: "$207,000 either buys one hell of a van, or pays of a LOT of credit card debt."
I was thinking the exact same thing.
Notes:
Went to repossess the home, instead of abandoned home, property contained a bobcat. Would not repossess again.
Why should anyone receive money to not do something they shouldn't do in the first place? That's disgusting. If you do something like that, you should be arrested for property damage of property you don't own (bank property) and forced to pay the consequences.