This morning, I was watching a news article on the Today show with my wife. The article was discussing a trend, noticed in Miami, and repeated across the nation of people selling everything out of a house before the bank forecloses on it and removes them. One lady claimed it was the bank’s fault because they gave her a loan she could never hope to afford. The last I checked, no one put a gun to her head and demanded she accept or sign the loan papers. To me, this is an ethical problem. Yes, the bank made a bad decision on the loan, but she asked for and accepted this loan.
Where I have my problem is her solution, along with, apparently, the solution of many others. Sell all of the fixtures, etc. out of the houses before the bank takes possession. The official reasoning is this gives money to pay other bills, but the reality is, there is a measure of revenge involved here. If they strip the house bare, the bank cannot resell it for the amount of the outstanding mortgage. They will likely have to take a loss on the property. In an already difficult housing market, doing this to an institution which has a fiduciary obligation to both depositors and shareholders is ethically wrong. The recipient of the loan bears the same responsibility for purchasing something they could not afford as the grantor of the loan. Granted, I do believe there are circumstances in this economy where someone could afford the loan prior to some life-changing event and now cannot. But the same cavalier attitude as described above is inappropriate.
From the other end of the debate, someone purchasing these houses, which have to be sold by the bank, has an uphill battle when getting the property. I should know. I am the purchaser of a foreclosed property. Many of the properties I looked at with my wife were not only foreclosures, but some of them seemed to be deliberately gutted before they were unoccupied. One, in particular, we almost purchased, showed this very well. The kitchen had been gutted to the point the original brick work of the house was exposed. To have assumed this property would require spending thousands of dollars on top of the purchase price simply to render it habitable. Trim was missing, wiring had been stripped, a window box seat had been hacked apart and part of the fireplace was ripped out before it was bricked up. The house we did purchase had trim and moulding removed and it’s kitchen had been laid bare, doors were taken from hinges and some of the antique door furnishings, (knobs, strike plates, hinges, etc.) had been removed. We have to restore all of that and fix the damage. I will be the people who lost the property never thought of the people coming behind them. That’s a shame. From what I hear, they were good folks who ran into a bad situation. I’m sorry for that, but taking it out on me because they were angry with the bank isn’t appropriate either.
