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 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)