Foreclosure and vengeance

Today’s Wall Street Journal reports (subscription required) on a growing practice: foreclosing lenders and auction purchasers of foreclosed homes are paying the former owners cash to leave the properties without vandalizing them. The payments, which range from hundreds to thousands of dollars, are considered a “win-win” because they give the foreclosed owner some cash while saving the foreclosing lender or purchaser from many thousands of dollars in damage to the foreclosed asset. An experienced eye can distinguish between random violence by trespassers–graffiti, broken glass, etc.–from the “frenzy of destruction” caused by an “enraged, delinquent mortgagor:”

Light switches, outlet covers and thermostats were smashed. There was what looked to be crowbar damage along the staircase. A large pool of paint had hardened on the living-room carpet. It appeared that someone had dripped motor oil in a trail that wound its way through every carpeted room. The appliances were gone, as were most light fixtures. A cabinet door had been removed and left soaking in a full tub of water. Not a wall was left without a hole the diameter of a closet rod, including the pink child’s room once carefully decorated with a floral wallpaper stripe.

The story closes with the tale of a foreclosed owner who, when offered $500 to vacate quickly, points out that it will cost the bank a lot more if he stays. He said he did not intend to damage the house, he was merely pointing out that eviction is more expensive than a cooperative move-out. The bank upped its offer to $2,800 and the man left, the house broom clean and undamaged.

7 Replies to “Foreclosure and vengeance”

  1. Seth

    Can I simply say what a comfort to uncover somebody who actually understands what
    they are talking about online. You certainly understand how to bring a problem to light and make it important.
    More and more people need to look at this and understand this side of your
    story. It’s surprising you are not more popular given that
    you most certainly possess the gift.

  2. Zach Horowitz

    Although this type of property damage in unacceptable and banks would probably like to see the evicted residents take responsibility for their actions, it is not economically practical. In addition to expensive legal fees, it is important to note that you can’t win money that the defendant doesn’t have. These people are being evicted because of their inability to make their mortgage payments. Even if the banks did decide to press charges, there wouldn’t be any money for them to win. Given this, I think that paying residents to leave peacefully is definitely a mutually beneficial situation.

  3. Anjoli Jagoda

    I wonder if any of the foreclosing lenders or auctioning purchasers have pursued legal action for the destruction of their property.

    It’s definitely a tough issue. Should people who default on an contractual agreement be paid money for the consequences of defaulting? Seeing my neighbor’s house get repossessed after their father died makes me unable to take a stance against paying people whose homes are foreclosed, though.

  4. Jimson

    A $500 dollar offer to vacate quickly? I supposed it’s something but many of these people have lost the homes that they have held for most of their lives. Although, it is still not acceptable to vandalize or destroy property and they should direct their frustrations to another venue. With this growing crisis, it is definitely in the interest of the lender or purchaser to offer an incentive so that foreclosed owners will not destroy the property. And if the damage occurred before the house was foreclosed while it’s still in the possession of the owner can they be held liable since they are being evicted?

  5. Richardson Bosquet

    I also agree that this is a logical solution to the problem of having delinquent mortgage payers comply with their eviction peacefully without the destruction of the property. Simply put it’s economically correct thing to do. But while I understand that those being evicted will be quite angry, is there honestly nothing that they can can be charged with if they inflict such damage after they no longer legally possess the property? Of course you can never tell when the damage was inflicted, whether while they actually owned the house or not, but wouldn’t such damage as explained in the original document be reasonably classified as hazing at that point?

  6. Geetika

    This sort of property damage is unacceptable. Banks can probably look for some reassurance from the insurance companies in cases of severe damage. However, I feel that paying the former owners cash, which is significantly smaller than the cost of potential damages, is certainly a better method as both parties walk away happy and at a financial advantage.

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