The house strippers. Real estate’s latest nightmare.

No, not those kinds of strippers.

There are people in our area who are taking a bad housing situation and making it worse.  I call them the house strippers.

These guys and gals target homeowners who are losing their homes through the foreclosure process.  They approach the defaulting homeowners and make an offer:

“Before you get evicted, give us a call and we’ll get your keys from you.  We’ll pay you $1000 (sometimes much more…depends on the house) for the keys and you walk away.”

Once the homeowners leave the house, the strippers take everything of value out of the house.  I mean everything. Appliances, copper piping, light bulbs, doors, you name it.  Everything goes.

For whatever reason, the homeowners are often angry with the lender for evicting them when they stop making their mortgage payments.

This is especially nasty because it makes it harder for the lenders and their investors to recoup their money when they reclaim a house.  Many of these houses are going to have to be torn down.  Does it make financial sense to invest $150,000 bringing a house back to marketable condition, when the after-repair market value is $205,000?

For information on the other scams that are making the housing headaches worse, check out Jon Sterling‘s new book Mangled Mortgage.

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Foreclosures


Foreclosure is the process by which a lender reclaims property when a borrower defaults on a loan.

The foreclosure laws change from state to state and this is the basic process:

  • The borrower defaults on mortgage payments.
  • The borrower gets phone calls and letters from the lender demanding payment.
  • If the payments are not made, a notice of default is filed with the county which usually allows for a specified period of time for the borrower to make the payments current.
  • If the borrower fails to make the payments current during the redemption period, a notice of sale is posted on the physical property and filed with the county.
  • A sale is held where the property is auctioned to the highest bidder at the time and place designated in the notice of sale.
  • At the auction, one of two things happens.  The property is either sold to the highest bidder, or nobody bids on it and the property goes back to the lender.
  • When the property belongs to the lender, it is called real estate owned or REO.

*It is usually possible to stop the foreclosure process at any time by becoming current with all past due mortgage payments.

Some consumers are headed for foreclosure, regardless of efforts to avoid it.  In most cases, industry professionals do not even know a homeowner is headed for trouble until it is too late.  Foreclosure is considered a last resort by lenders.

For more information on the forclosure process or to purchase a copy of Mangled Mortgage, email info@mangledmortgage.com.