“Cash for Keys”: Banks Attempt to Bribe Squatters to Prevent Destruction of Properties Before Eviction
March 30th, 2008Via: Wall Street Journal:
The stucco subdivisions of Las Vegas are caught up in the nation’s foreclosure crisis. These days, bankers and mortgage companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. Real-estate agents estimate that about half of foreclosed properties to be sold by mortgage companies nationwide have “substantial” damage, according to a new survey by Campbell Communications, a marketing and research firm based in Washington, D.C.
The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. A ransom? A bribe? “Yeah, somewhat,” says John Carver, an agent specializing in foreclosed homes for Prudential Americana Group in Las Vegas. But “you lose a house, and then you get some financial help — it’s a good thing…It’s a win-win for both parties.”
No one tracks how frequently such payoffs are made. In Las Vegas, agents hired by the banks to handle foreclosed properties say the “cash for keys” approach, as it’s known in the industry, is a regular part of the job. After all, formal eviction proceedings can take months and cost potentially much more than a payoff.
Analysts predict that as many as two million homeowners could enter foreclosure this year, caught by a slowing economy, falling house prices and, in many cases, adjustable mortgages with rates rising from high to higher. In Las Vegas, 1.9% of homes in the Las Vegas area were in the foreclosure process in January, almost triple the rate of a year earlier, according to First American CoreLogic Inc., a Santa Ana, Calif., real-estate and mortgage data company.
…
Cruising the wreckage of the Las Vegas property market every day in his silver Cadillac Escalade, the 38-year-old Mr. Carver has developed a connoisseur’s eye for pointless destruction. Vandals who break into empty houses often smash windows and paint graffiti on the walls, he says. But it takes an enraged, delinquent mortgagor to indulge in a frenzy of destruction, such as the one that took place recently in a three-bedroom, 1,949-square-foot house in a residential and industrial area northeast of the casinos on the Strip.
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.
Research Credit: JH
Wheow-wheow-wheow-wwwwwheoooow…
“These days, bankers and mortgage companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc.”
They left their pets behind when they left, locked inside and telling no one? I’ve got a better idea than paying these people off, Mr. Mortgage Banker. Why don’t you pay me to LIQUIDATE THEM? I’ll work cheap.
I’ll pour tm scads o’ drinks after he/she has liquidated the pet-abandoning creeps.