People that are usually honest and law abiding sometimes commit acts of vandalism and theft when they are losing a home to foreclosure. They do not consider the removal of light fixtures, cabinets and other built-in components as theft. When they agreed to make payments to a bank or mortgage company, they considered everything theirs from rooftop to foundation. After they can no longer make the payments and become too far behind to catch up, the loan is accelerated and foreclosure proceedings begin. Some people decide to strip the structure of anything of value from copper pipes to carpeting in an effort to make up for their loss.
I am currently searching for a home in northwest Indiana, and although I would never buy a home in foreclosure, I discovered a duplex that I used to rent. My former husband and I were on a lease to own program, but we decided not to buy it. The home was absolutely beautiful and spacious. It met all of our needs, but as the housing market fell, the price became far too high. The home was no longer worth the expense, and obtaining a loan for the full amount would have been impossible. Also, the neighbor was not a kind person, and the home and property that she once protected like a bulldog was now in foreclosure. The article entitled Is Buying One Side of a Duplex a Good Investment details our experience.
The photos revealed the current condition of the house. It was obvious that she decided to strip it because of the foreclosure. The kitchen cabinets and flooring were completely gone. The entire house looked like it had been ransacked. She did more than just strip it bare. It had been pillaged and plundered, and the value had plummeted as a result of her decision to take everything nailed down. My ex husband and I had once agreed to pay $159,000 for our side of the duplex, and the neighbor’s side was now listed at $89,000.
It is Not Okay to Strip a House in Foreclosure
Depending on where you live, you can be criminally prosecuted if you strip a home in foreclosure – even if you installed the cabinets, fixtures and other items. Even though you paid for those items, strip it and you could be charged with theft since cabinets and fixtures were part of the home when it was purchased.
The working components of the house as well as all built-in items should be left in place, and it is unwise to strip away anything attached. Neighbors of those that strip homes in foreclosure have been known to turn people in, and for a very good reason. Surrounding home values plummet when structures are devastated. They usually sit abandoned for months or years on end, and people do not want their homes devalued because of a nearby foreclosure that has been reduced to a shell.
Strip Away the Value and You Will Be Charged with the Deficiency
Strip a house of working components, fixtures, carpets, pipes and cabinetry, and the structure will lose significant value. Those in foreclosure do not care – at least not at first. The home will be sold, but usually for far less than the amount that is owed. The lender will not erase the difference and simply forget about it. People that go through foreclosure eventually receive a statement that lists the deficiency. The problem does not end there. The government also receives a statement. Even when a deficiency is forgiven by the lender, the government sees the difference as income. All income must be reported, and you will be taxed. Strip a home in foreclosure, and you will pay for it in the end, and many others will too.
Sources: Damascus man even took the kitchen sink from foreclosed home
Taxes and Foreclosures: Untangling the Mortgage Mess