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TitleSearchBlog.com

Houses stripped and demolished before foreclosure
by Dave Pelligrinelli | 2009/02/27 |

Foreclosures now represent nearly half of real estate transactions nationwide. According to the National Association of Realtors, distressed properties already make up 45% of transactions, and climbing. Home prices continued to decline at a record pace last month, with no sign of stabilizing. further price declines could result in even more foreclosures, as homeowners are unable to refinance out of unaffordable ARM's, or just simply realize they are extremely out of equity, and walk away from the property. Borrowers are even blatantly advertising to sell fixtures on Craigslist. One owner leveled his home with a bulldozer a few days before auction.

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When borrowers do leave their property, they do not always simply "walk away." Last week, a home in Monsey NY was completely demolished just a few days before the scheduled foreclosure auction. The property owner Samuel Fisch later admitted to tearing down the structure. A neighbor who had helped out by paying the property taxes initially received a summons for not obtaining proper demolition permits, but it was later determined that he was not the owner. Abraham Miller said he never owned the house at 1 Carlton Road, and was only doing the owner a favor by paying the property taxes. "A gentleman bought this property two years ago and he couldn't pay his taxes," Miller said yesterday. "He asked if I'd borrow him the money to pay the taxes. That's my whole connection to this whole thing."

Most distressed properties do not meet this extreme fate, but more often homeowners damage or strip out properties before being forced out due to foreclosure.

In Fort Myers, about 20 people did $75,000 worth of damage to an abandoned home in foreclosure. People living in the area said they had seen numerous cars going down the dirt road to the secluded house on many occasions since the home was foreclosed upon last year. An inspection of the home’s interior showed every room had some type of destruction, from broken windows to smashed in plaster to paint which was tacky to the touch, reports say. After the party, windows remained broken, huge holes were punched in walls throughout the structure, graffiti and expletives were spray painted on the walls and ceilings and two Budweiser beer cans were hung on a living room wall. Debris was scattered outside the house, but remarkably the inside — minus all the damage — appeared to be relatively clean. Deputies estimated the multi-story structure is about 4,000 square feet.

Some teenagers take advantage of foreclosed properties in less destructive ways. Skateboarders from as far away as Europe are flocking to Florida and California to enjoy the multitude of empty swimming pools, which make extraordinary skating venues. “We have more pools than we know what to do with,” said a skater who goes by the name 'Mr. Peacock'. Thousands of homes, many with pools behind them, are in foreclosure. “I can’t even keep track of them all anymore” he said. Skaters are finding a surplus of deserted pools in which to perfect their acrobatic aerials. In these boom times for skaters, Mr. Peacock travels with a gas-powered pump, five-gallon buckets, shovels and a push broom, risking trespassing charges in the pursuit of emptying forlorn pools and turning them into de facto skate parks.

More often, however, it is the property owner doing the damage. Borrowers will tear out anything not nailed down to try and sell it cheap for cash. Appliances, cabinets, garage doors, even electrical fixtures are removed and sold. I have seen ads on Craigslist all over the country where the appliances for sale show a photo of built-in appliances or cabinets, with listing advises that the buyer needs to remove the items. With these instructions, and pictures of almost new appliances, it is not likely that the seller is simply "upgrading." One Craigslist ad in California lists items such as outlets and the shower stall in addition to appliances.

This ad in the Miami Craigslist is for the AC compressor unit:

I am loosing my house to foreclosure and wanting sell the 4 year old 3 ton HVAC compressor before I do.
Compressor is like New and is pictured in this ad.
Still has freon charge so will have to be drain before moved.
I work nights and am off on Fridays and that is the best day to pick it up!

There is usually no legal action taken against the suspected strippers, who are generally assumed to be the homeowners who defaulted on their mortgages. That may change with the case of an Independence Township home, valued at about $2 million, which was stripped of a long list of items in January. “It could be a larceny charge and malicious destruction of property,” said Sgt. Matt Baldes of the Oakland County Sheriff’s Independence Township substation. “I’ve been at houses where they’ve stripped the whole kitchen out and then try to sell back the cabinets to me,” said Realtor John Graham, who lists several foreclosed homes in Oakland County. He’s also been through foreclosed homes that have price tags on things such as furnaces and plumbing. “I’ve seen it before — price tags on things, and then they let people come through and buy them,” he said.

Is it legal? “If you have a dishwasher that’s a built-in, it stays. If it’s on wheels, you can take it with you,” said Phil Seaver, owner of Seaver Title in Bloomfield Hills.  Real estate lawyer John Talpos of the Troy-based Talpos & Arnold law firm agrees with him. “You can’t take down a door on the basis (that) it’s removable and you can take it off at the hinges,” Talpos said. He added the terms of most mortgages likely prohibit any destruction of the home. “You’ve got a co-owner, so to speak, and you can’t do anything to diminish the value of the co-owner’s interest,” he said. “(The lender) probably has the right to come in your house and just look at it to make sure.”

That did not stop John Burgur's landlady from stripping his rental property last year. She took fans off the ceiling and the knobs off the doors, carted out the refrigerator and yanked up a toilet. She even pulled the plates off electrical outlets and unscrewed the faucet handles. His coffee maker and shower rod were gone. "I'm going to strip this mother," the 70-ish property owner raved to Burgur, as she ripped apart the 950-square-foot unit on Island Way. Welcome to a dark corner of the foreclosure business: People who lose their homes to foreclosure and in a pique of revenge strip the homes before the bank takes them back.

With home prices and sales continuing to plummet, this is not the last we will hear about this.

TitleSearchBlog.com

 Dave Pelligrinelli




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1539 words | 11537 views | 2 comments | log in or register to post a comment


Not always the homeowner's fault.

Not all of the destruction is the home owners' fault.  My home, which is still in forclosure for almost 2 years now, has sat vacant for almost a year.  (The lender has canceled several of the auctions for reasons unkown to me)..

We had to move for work related reasons, and let the house go into forclosure after listing it to sell for over a year.  Twice we had offered a deed in lieu of forclosure, both times rejected by our mortgage company. 

Needless to say, the home had sat vacant for over a year, has had all the copper plumbing stripped during that vacancy.  (other damage was done during that break in as well.)  We had a finished basement, and they ripped up the ceiling and holes in the upstairs walls to get to the pluming.

If the bank would of let us turn it over to them 2 years ago, they might of been able to sell the house intact.  We werent the ones trashing the house, but it still got trashed.

 (On a side note, I did take the lightswitch cover out of my daughters rooms, because they matched her bedding set, curtians and wall decorations and was part of a set.)

 
by Kacy Howland | 2009/03/02 | log in or register to post a reply

Sounds like the lenders need better property preservation and loss mitigation processes

IF all this is going on, it sounds to me that the lenders need to develop better loss mitigation processes -- and hire a better quality property preservation team.

One of my sidelines is field inspections. While this is something I got into through one of my refi clients who just wanted a quick drive-by to verify that the house existed and was in decent shape, I now mostly handle inspections for commercial lender properties (apartments, retail shopping centers, office complexes, industrial buildings). There is a major overlap between field inspections and property preservation, so much so that many of the email lists and online boards used for field inspectors are also used by property preservation folks. This has given me some first-hand exposure to the way these folks think and operate.

Loss mitigation, if done properly, should keep the borrowers in the home and happy to be there as long as possible -- and out without a chance to damage it when it is no longer possible to keep them there. Property Preservation, if done properly, should secure the home against burglary and vandalism. The lenders who are experiencing these problems are not doing enough in the loss mit and property preservation areas.

Nothing can make up for the anger, bitterness and frustration that comes from being forced out of your home due to circumstances beyond your control. So, even with the best loss mit and preservation in place, there is going to be some damage sometimes -- but it can be minimized if the lenders will just cut the borrowers a break and treat them as they would like to be treated, rather than as some sort of worthless piece of scum. Far too many financial "services" companies look upon anyone who is not current on their bill as a deadbeat and fair game for abuse -- this is what leads folks to walk away and to take everything they can pry loose with them when they do. If the lenders have some compassion and offer options that a borrower can live with, they will come out the other end of this economic mess we are in (I hesitate to call it a Depression, but that feels more accurate than a recession, IMHO) with property they can sell and borrowers who are paying. If the lenders think they can abuse their customers and not have it show up on their balance sheets, they will have a "come to Jesus" moment one of these days.

All IMHO, of course.

 

 

 
by Timothy Gatewood | 2009/03/09 | log in or register to post a reply
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