s/since/sense

So, why would you be friends with such a loser?

Seems like a pretty pragmatic thing for the bank to do. You could OD on 'shouldn't' (homeowner SHOULDN'T stop paying bills, homeowner SHOULD'T vandalize, bank SHOULDN'T loan to deadbeats, deadbeats SHOULDN'T buy homes, etc) and you know what, you'd be right. However, it might be more prudent to look at what people and institutions actually do, whether they should or not, and plan accordingly.

I've had to go to so many foreclosed homes and repair the damage that occurs when someone(usually a neighbor) runs in at night with a pair of bolt cutters and cuts off the condensor unit of the house's AC system.
It's a big slug of copper and machine parts that can be resold quickly, so that is their incentive. Things get ugly in the foreclosure market. Very very ugly.

When I worked at Wells Fargo Home Mortgage, as a collector (sometimes Loss Mitigation and Liquidation...it was kind of hazy at the time) it took a lot of digging to find Wells Fargo's literature on the Cash for Keys program. If I remember right, too, it had a lot of stipulations that would make it very difficult for a homeowner to take advantage of.

It was my understanding, though, that cash for keys was an accepted foreclosure, not necessarily a bribe to keep the owner from vandalizing the home. If memory serves right, CfK was in lieu of WFHM taking the homeowner to court and having Property Preservation come out to the property to secure it (treat the water pipes, etc).

I have to wonder, if I had a hard time finding ANY information on CfK 2 years ago, is it really a priority? I'd have to think not. WFHM didn't seem in the business of cutting people breaks. Regardless, once I found it I would let people who I thought could utilize it know about it, to bring up with their Loss Mitigation processor.

I know there's a few current/former WFHM collectors here, and I'd like to see what they know about this. My info is spotty and possibly outdated.

@xerotope: the spell checker probably picked one over the other if it was auto-checked.

It's sad that people are trashing perfectly good homes. It's also sad that people are getting kicked out of perfectly good homes. Lastly, it's sad that I'm still trying to save up a good down payment for a home of my own.

Sadface.

@xerotope: Please direct any spelling/grammar errors to the author of the post itself, and not to the comments. Some do not read the comments, but do read their email. Links are on your left.

Thanks for this article. My husband and I are in the process of buying a home that was listed as a short sale. I found out just before the weekend that the home was sold to sheriff a couple weeks before our offer, and couldn't understand how the "sellers/owners" were still in the house. This makes a lot of sense, and also makes me feel a little better about how we will find the house. I was getting concerned about that, and about the bank getting them out when it was time to turn over the keys.

@Chumas: So, is it really of any benefit for the bank to pay off the foreclosed owner into not vandalizing their home, only to have the neighbors ransack it once they've moved out?

@sowellfan: To make you feel better about your life. Duh.

@mianne: It can be in most cases. You're really playing a percentage game with regards to having the equipment stolen or not.

Buster Bluth's "are we concerned about an uprising" comes to mind. Has anyone who has purchased a foreclosure property experienced any kind of recourse from the former owners, still upset at the bank or for losing their home?

@sowellfan: Methinks that Phil doesn't exactly approve of this homeower. Just something I was starting to pick up from the post. Possibly he has no control over his wife's friends?

@sowellfan: She's just "stickin' it to The Man."

@sowellfan: I second that. It sounds like your wife needs to start hanging out with a higher class of people.

@Chumas: If a neighbor does it, they can be prosecuted and held liable for damages. But if the house isn't yet title to the bank, they have the right to trash their own property.

@sowellfan: Two words. Three. Way.

@mianne: Your correct that the neighbors could vandalize it but I learned a trick sometime ago from a contactor, basically about human nature, for keeping a house under construction clean. Every time he left the house he left it in a very neat and organized condition. Every time a subcontractor comes into a clean house they dont want to be the one to mess it up so they clean up their mess before they leave and so on.. The same idea applies to an abandoned house. If everything looks nice and upkept, people are far less likely to vandalize it then if they see broken windows or signs of obvious theft.

This happened in a unit of my condo just a couple months ago - however, the inside was still in pretty crappy shape (not trashed, but definitely neglected). I hope the bank didn't pay the owner very much.

So, does that get added to the amount they still owe to the bank once the house is re-sold? Or, generally, are there so many foreclosures that banks are 1099'ing the outstanding debt post-sale?

I understand the whole vandalizing the house and stuff what I can still can't quite get into my head is why would someone leave an animal to die of stravation in a home that is just wrong!

@sowellfan: Life is funny that way. A friend of mine of 20 years now, decided to stop paying his mortgage last year and is walking away from his house because he is upside down on it. I don't agree with it one bit, it's selfish and ultimately ends up hurting someone like my wife and me who want to buy a house. However, this is my friend of 20 years, almost a brother. I can't just stop talking to him, it just doesn't work that way.

This is a good program in a lot of ways. It only costs the bank a couple thousand dollars, when they're already out much more than that due to the foreclosure in the first place. While the former owners get a place to stay when they're desperate, and an occupied house keeps its value significantly more than the same house unoccupied. This way the bank can minimize its losses overall. Win-win?

@edguitar:
Because people suck. It's a result of the ME generation.
Pets aren't beloved members of the family anymore, but rather status symbols and accessories.

I have nothing to contribute other than to say this is old old news.

@Alexander: Well said, Alexander. Some folks have just never faced this sort of question about a friend, I think.

@balthisar: Banks are 1099'ing deficiencies. Usually cash-for-keys comes with an agreement by the bank not to seek a deficiency judgment, and homeowner releasing bank from liability for bad lending practices.

I wish they had offered this to my neighbors. They lost their jobs, stopped paying their mortgage, and tried to set a short sale, but failed. So, they took everything of value out of their half of our duplex (including the hardwood laminate floors, WTF?), and dumped the engine out of their boat onto the driveway on their way out. It's such an eyesore, and I'm almost sick thinking about who would be willing to buy such a sh*thole, and what it's doing to my property value.

So if YOU, sowellfan, lost your job and couldn't pay your mortgage, you would be a loser? Glad I don't have YOU as a friend.

They key here is to buy a whole bunch of cheap meat, like rolls of group beef and whatnot, crack them open just slightly, then just leave them sitting around on the floor or hide them in various rooms. hilarity ensues...

@Scuba Steve: With the first time home buyers tax credit you might want to look into a way to avoid a down payment. Never a better time (well, in my market anyways, we didn't get so overinflated).

@edguitar: This is exactly what happened that led me to getting the dog I have now. The people who owner her had their home foreclosed on. They moved out and left her in the locked backyard. Luckily the neighbor across the street noticed there was a puppy there after they moved out and fed her through the fence for a few days and then brought her to their house for nearly a week before finally finding a home for her.

I should note that my dog was, at the time I got her, about a 4 month old Pug/Chihuahua mix who weighed in at all of 4.5 lbs when I got her. She had the sweetest little personality even then. It just makes me wonder how they could move out like that and not even care that she would have starved to death...or worse.

If you can't pay your mortgage that does not necessarily mean you are a loser. S*** happens we don't expect sometimes, sowellfan.

I guess what this tells us is that if you only borrow what you can afford and take care of your obligations you are sucker.

If you take out a loan you can't afford, you get to live there for free in the foreclosure process then get paid not to trash the place.

Isn't capitalism supposed to be about the right fiscal incentives in place? Oh that's right, we threw that out when we bailed out the banks that are now paying record salaries.

How is socialism not better again?

@undefined: @savdavid: but she didn't lose her job, thats the thing. She is just plain old irresponsible.

@savdavid: you should read the article. She did not lose her job.

@grapedog: Heh. A restaurant that went out of business due to taxes owered left the meat in the freezer, opened the door and turned off the electricity. I heard it was particularly awful and the building was unusable, even after being gutted. The new owners sold it to a developer who tore it down and used it for part of a strip shopping center.

@Scuba Steve: it's a waste of money to put so much on a down payment. You're better off with an FHA loan and 3.5% down. You'll have more money for "emergency" repairs and losses than you will if you put such a large down payment.

It sounds good to put down 20% but unless you have another 20% of the house on hand you could end up moving into a house that has hidden problems no inspector will ever catch.

Besides with the way the houses are right now you're better off with 3% upgrade your house and wait for the market to go up upon which have your house reassessed and boom instant equity you'll hit the 80/20 mark on the house and your low PMI payments go away.

Just a thought.

@temporaryerror: care to qualify with facts?

@coolteamblt: that was one reason why i stayed clear of any duplex. I feel so bad for you. You should look into buying the foreclosure and converting it into a big single family or a rental unit.

@coolteamblt: Many municipalities have blight laws. Such laws force property owners to cut grass, trim weeds, remove refuse and keep the exterior of their property free of debris and in reasonable shape.

Perhaps your community has such a law? You may not be able to do anything about the interior of that property, but you certainly can start complaining about the exterior.

@edguitar: Most people buy pets as impulse buys without ever considering the cost of ownership and the responsibility. These are typically the same people who took out an ARM 3 times what they can afford so it's not too surprising to me.

2,000 is a ton of money?

@savdavid: Did you read the editors description of his friend? S*** didn't happen. She's just lazy and irresponsible

when copper prices were high a couple of years ago, people would steal those AC units off brand new construction too! now that copper has come down, maybe they'll be less inclined to gank them-

@pragakhan:

It is in pennies.

With all the talk about evil predatory mortgage lenders, nobody is talking about the person in this tale, the evil predatory borrowers.

You know who they are, the ones who get a mortgage, or any loan, despite that they know they can't afford it and have no intention of fulfilling their part of the contract. They get to live in a home for free for months -- it takes time to become delinquent, process paperwork, go to court, and process the foreclosure and eviction, etc. And since EVERYONE is walking away from their upside down loan or foreclosure, there is no longer a stigma attached to being a deadbeat and a welsher.

These deadbeats need to be held responsible. They need to be thrown in prison for vandalizing the bank's property if they hand over the bank's property in resalable condition.

@AustinTXProgrammer: You can use the FTHB tax credit as part of your downpayment *if* you close on an FHA loan before 12/1 with a 3.5% cash downpayment.

There's a Consumerist article on that.