The Wall Street Journal has an interesting article on the phenomenon of former homeowners trashing properties after they go into foreclosure.
Representatives for banks are now offering homeowners cash payments to leave the property in good shape.
A few human interest stories from Las Vegas:
The original owner bought the house new in 2003 for $131,000. A year ago, Mr. Carver says, it could have fetched a quarter of a million. But the market fell fast and the owner, for unknown reasons, fell delinquent. The bank hired Mr. Carver and Leslie Carver, his wife and business partner, to list it, but chose not to refurbish before selling. The house sold for $170,000 in November, ferret scat included.
...
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. It's damage that Mr. Carver described as "a vengeance-type thing."
"Some people have issues, and need to do what they have to do, I guess," he said.
The former owners, who couldn't be located, paid $261,892 for the house when it was new in March 2006, borrowing $209,513 in their first mortgage, according to public records. Now it's listed for $149,000 -- as is.
...
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.
Leave it to the writers at the journal to be able to identify ferret scat from other scat.
Anyway, what I find interesting is the last story. The homeowner bought the house in 1993 for $140K. He cashed out $207K from the phantom 'equity' created by this housing bubble to pay off credit card bills and buy a new vehicle. This was just a home equity loan; there's still a first mortgage tied to the property.
Who took advantage of who here?!?! Did the bank put a gun to this guy's to take out a second mortgage? Of course, the borrower is taking his lump, as the bank should take its lump as well...
Posts
|