More Foreclosures May Come with Major Interior Damage

We’ve all heard the horror stories about foreclosed homes that were trashed and largely deconstructed or demolished by the former homeowners before they left. If a homeowner thinks that they will “get back” at the bank by leaving a mess behind them, however, they may soon have another think coming. Banks are taking steps to begin suing former homeowners for the cost of repairs and for vandalism and theft as well[1]. “Anything that came with the house needs to stay with the house,” explains Florida Sheriff Larry McKinnon, who concedes that lenders are completely within their rights to go after former homeowners who destroy foreclosed property before they leave and/or steal or sell off appliances or other items that came with the house.

The destruction is such a problem in many cases that individuals buying homes at auction are opting out of the deals after making their original down payments. “They [the buyers] look at these homes and say ‘if this is the damage I can see, what else did the homeowner do to this place that I can’t see?’” explains real estate agent Nick Davis[2]. In today’s market, buyers are less willing “clean up messes in exchange for a good deal [because] there are so many homes for sale now,” he adds. And that means that the banks are racking up serious deficiency judgments against former homeowners and they have even more reason to pursue them for those debts. If a home that would have sold for $100,000 in good condition and that has a $250,000 lien goes for $60,000 because of damage to the property, that $40,000 deficiency can be added to the amount the bank is still owed by the homeowner. Most homeowners do not realize that if a foreclosure sale does not permit a bank to recoup all its losses on the loan, the lender can sue them for the difference years later.

“You may think you’re getting back at the bank,” warns McKinnon, “but the bank may have the last laugh.”

Thank you for reading REJournalOnline!

Tell us about your home-rehab horror stories in the space below.