Foreclosure and Personal Character

September 22, 2009 by  
Filed under Money and Behavior

While on the treadmill this morning, I watched a piece on the Today Show that had me re-thinking the entire home foreclosure problem.

The Today story focused on the epidemic of “stripping” of homes in foreclosure in the Phoenix area. “Stripping” is the forced removal (i.e. theft) of appliances, cabinets, fixtures, flooring, you name it from the interior of the foreclosed homes.

It turns out that most of the stripping is actually done by the homeowners as a goodbye gift to the lender and to their neighbors. (More about the neighbors in a minute.) These homeowners then try to sell the stuff on craigslist, etc. It is common practice not only in Arizona, but in California, Nevada, and Florida. Now the Feds are after them. Good.

What message does this send to Mr. ToughMoneyLove? It tells me that personal character has a lot to do with whether these stripper/criminals really should have been homeowners to begin with.

There are three primary reasons why we are experiencing a foreclosure epidemic. First, too many folks bought homes they couldn’t afford. Second, too many folks bought homes with no equity. Third, some homeowners suffered the dual misfortune of losing their job and living in a home that rapidly declined in value. It seems that a lot of folks in the first two categories also had severe character flaws, now revealed by their reactions to foreclosure.

Do any of these circumstances justify thievery? Absolutely not.

Rather than accept personal responsibility for their borrowing stupidity or acknowledging that they are the unintended victims of bad government economic policy, these bums take it out on the lender and neighbors.

Yes – the neighbors who remain are being victimized. The Today piece pointed out that most of these stripped foreclosures are being sold “as is.”  In one case, a home that sold for $288,000 two years ago was stripped clean by its former owners and is now on the market as-is for $69,000. The neighbors are no doubt thrilled with that outcome.

This is what can happen when the financial worthiness of an individual is measured primarily by a credit score. It doesn’t take much in the personal character department to manipulate yourself into a high FICO score. Maybe the lenders are getting what they deserve in lending to low-lifes with high credit scores. Maybe they will learn their lesson and start to look at the entire financial picture – a return to real loan underwriting.

And the foreclosed home strippers? Let them live in tents – that leak.

Photo credit: respres

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15 Responses to “Foreclosure and Personal Character”
  1. Rick Beagle says:

    First of all, let me begin this conversation by stating that I do not (now nor ever) support or endorse any type of criminal activity.

    With that said, I find your continued coddling of lenders and the continued berating of “government” troubling. How about we have a little personal responsibility for the lenders in this equation? How about we see a little jail time or “gasp” these organizations forced to refund their ill gotten goods? If we are going to point out the criminal activity of one set of the population as vile, shouldn’t there be equal veracity in our efforts to hold those who used their businesses as a cover for their fleecing of the terribly stupid, desperate, hopeful and naive?

    Which is where our opinions differ tremendously, I am for equal accountability under the law for all, and generally not opposed to rethinking of our laws and guidelines when injustice presents its ugly face. You sir seem more in favor of brushing aside any reasonable discussion on the misdeeds of business, tend to focus on the misdeeds of victims, and scream hastily at the mere whiff of reasonable restrictions on illegal and immoral actions by said businesses.

    Is it your belief that our economy should be governed by the strong survive and the the weak should be ignored or left to their own devices? Have you not read history? Trampling on the rights of the impoverished while justifying the actions as if they were better or worked harder or a host of other frivolous and cold comments, does not end well.

    Perhaps it is time for the Fiscal Conservatives to quit yelling “just let them eat cake”, and do a fundamental rethinking of what exactly they are promoting? There is a reason that greed is considered a deadly sin.

    Finally, wishing any person or family the ill fortune of sleeping under a leaking tent is a truly foul thing to say, and far too common in today’s economy.

    You need to relearn how to be a human again.
    Rick Beagle

  2. My Journey says:

    Rick & TML,

    I think the problem is people feel victimized against the lender. They feel like they deserve the cash from that fridge or oven because they were “duped” into taking on a mortgage they coulnd’t afford.

    I don’t wish ill upon anyone, but TML is right, this is activity is criminal .

  3. MasterPo says:

    As bad as stripping is, IMO until the bank changes the locks I still own it. If I am taking the loss anyway why can’t I sell something in it?

    If in the 11th hour the owner came up with the money to pay the bill I’m sure the bank wouldn’t mind that. So that proves I’m still the owner until the Sheriff puts the sign on the door.

    I don’t think it’s an issue of getting even with the bank. Rather just grabbing what you can out of a bad situation.

    Remember when Drexel went belly-up? All the employees walking out on the last day carrying furniture and wall art?! :-)

  4. cjbr549 says:

    Jeez, this site has sure attracted some bleeding hearts. First off the house didn’t belong to the person who is selling all the stuff from it, so it’s stealing. They should be sleeping in that Phoenix sheriffs’ tent jail. They PROMISED to pay the bank back or give up the house to the bank if they couldn’t pay. They had the opportunity not to buy the house. They did and they are thieves for stripping it, plain and simple. Not victims of the “System”, not heroes for taking on “the Man”, just thieves. The banks were stupid to lend to them, but that doesn’t condone this kind of behavior. I bet the neighbors don’t feel like these folks are victims.

  5. lurker carl says:

    I doubt if MasterPo would feel that way if he were the lienholder or the next door neighbor. This destructive behavior is common when low-life tenants are evicted for not paying the rent.

  6. Rick Beagle says:

    MasterPo is not a bleeding heart, but the other side of this story in question is not helpless nor entirely blameless. Perhaps if this continues to occur, lenders might be more willing to sit down with the tenets in an effort to find some common ground.

    Guess it is more profitable repossessing homes while getting paid for the effort by the same tax payers you just booted. Seems a bit tacky to me, but what do I know, I really am a bleeding heart.

    Rick Beagle

  7. MasterPo says:

    Wow! Rick actually paid me a compliment! 😉

    Not to bight the giving hand, but Rick *why* SHOULD the bank as you put it “sit down with the tenents in an effort to find common ground”??

    The house buyer went into an agreement with the lender. Now they can’t live up to it. What sort of “common ground” do you think they can find? They already have a 30 year loan at 5-6% (a typical mortgage these days). So now what – Extend it to 35 or 40 years? Drop the interest more? Aw heck! Just give them the house. The bank didn’t *really* expect to get paid back, right? :-(

  8. MasterPo says:

    Lurker – Keep in mind that these are home OWNERS, not tenants per se. Yea, there’s the old saying the bank owns the house and just lets us live there. But don’t confuse hyperboly with reality. The house is collateral for the loan (mortgage). That’s all. It still is the owner’s property. If it was the bank’s property then let THEM pay the utilities, insurance and property tax on it!

    With that said, no I wouldn’t like it. But I don’t see a good way to prevent it that doesn’t at the same time infringe on my right as home owner in good standing to do maintenance and upgrades to the property as I see fit too. You wouldn’t like it if you needed the bank’s permission or your neighbor’s OK to repave your drive way, put up new siding, plant trees, redo your kitchen etc.

  9. PW says:

    I bet those people “stripping” were told to do this and how to do it by ACORN. Chew on that statement, Beagle. Now don’t be “snapping” at me! I just wonder what Obama group let you off their leash!!

  10. Rick Beagle says:

    PW… what you are just making stuff up? Geez, get a grip. It’s like you are dying to yell ACORN whether it makes sense, applicable to the discussion or even relevant to the person to which you yell it to. Gawd, you really have lost your marbles.

  11. Andrea says:

    I saw a piece on this a while back.

    The people in these homes do own the home, yes, just like I own my home. If I wanted to rip out the downstairs bathroom, sell the tub, toilet, sink etc. and turn that room into a closet, I would be within my rights to do so. I don’t have to get an OK from the bank who holds my mortgage.

    On the other hand, homeowners who know that foreclosure is imminent and who rip out those fixtures out of revenge … well, I think that’s misguided and wrong.

    On the OTHER other hand, being in a position of having had a recent job loss in the family that severely impacted our income and therefore in the process of trying to get a modification to our loan … which was not even close to being a debt burden with our income level before … these banks are not winning friends and influencing people. I won’t go into the ridiculously obstructive tactics they’ve built into their processes here, but I can guarantee you that I’ve had some not so kind thoughts about what I would like to do to them, and where I would like to shove a piece of stripped piping.

    If the banks are willing to let the homes go into foreclosure so they can reclassify the debt as toxic and let taxpayers pick up the tab, I don’t see this as being a matter of personal character ONLY for the homeowner. People are mad, and I think rightly so.

    Myself, if I knew it was going to get to a point where my home was going to be foreclosed because the bank was being uncooperative, I’d probably stop making payments before I was really forced to, stick that money in a mattress and set it aside for the expenses I’m gonna have renting a place. Bad character or rational behavior, TML?

    And yeah, I’m with Rick … sleeping in tents, come on. That’s a bit much. You’re way too intelligent to make a statement like that. You know the reality of what is going on with people is not just one general statement of character, it’s thousands of individual stories. I’m sure if you randomly picked a few of them to sit down and talk to, you’d have a harder time condemning.

  12. Andrea and others: Most if not all mortgage and deed of trust notes require the homeowner to preserve the value of the collateral during the term of the loan. That is why, for example, you are obligated to maintain homeowner’s insurance. The homeowner promises in the loan agreement not to take actions that would impair the value of the collateral. Ripping everything out of the inside – foreclosure or not – is a contractual breach of that promise. I am not defending heartless lenders who will not work with suffering homeowners. But what benefit is there to anyone in fighting heartless conduct with illegal conduct? As for stopping payments before you have to so that you can make other survival plans, I am OK with that because it still leaves the lender recourse – the unpaid amounts can be included in a post-foreclosure deficiency judgment should the lender choose to use that remedy.

  13. Andrea says:

    And I said it was wrong.

    I still stand by my premise that if I wanted to make changes to my home, I can do that. I base this on looking at some of the butt ugly colors some people in my neighborhood have chosen to paint their homes, which I believe has got to drop their property value somewhere in the lines of 150%. 😉

    Couldn’t the damages be included in a similar judgment? Not that it matters, judgments are worthless if there’s just no money to be recovered.

  14. Party Pooper says:

    In a society where homeowners generally think they are superior to renters, I find it amusing that anyone would think of themselves as being in the owner “caste” just because they have a mortgage and their house is collateral.

    Sorry, but if you got a mortgage with zero or very little down, you have no skin in the game, and you are a tenant to the bank.

    And in the case of the neighbors who “no doubt thrilled” by these stripped-clean houses lowering their property values, I would suggest not making comparisons to two years ago, since at that time the market was insanely inflated anyway.

  15. “Stripping” of structures by foreclosed owners — or departing renters, for that matter — has been going on for a long time, long before the present mortgage crisis.

    IMHO, as long as you owe a mortgage on a house, you don’t own the house. The bank co-owns the house. You may own a small share of it, in the form of the principal you’ve put into it. But as long as you owe anything on it, you are not the sole owner.

    Would you rip off everything in a structure if you’d borrowed the money from your dad to buy a house and he was forced to sell it to someone else because you couldn’t pay him back? If you wouldn’t steal from a family member, why should you steal from any lender?

    While I have no sympathy with the crooked lenders who issued the flurry of bad loans that helped bring on the current recession, two wrongs don’t make a right. Just because someone else is a crook and a jerk doesn’t mean you have to be a crook and a jerk, too.

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