A man in Ohio bulldozed his large home rather than give it back to the bank in foreclosure. Part of me wants to cheer him on, another part wants to hear the bank’s side of the story, which was not presented. I wonder if the bank will press charges and if the guy will go to jail.
The Millennial Star
I can see it from both sides. The man is frustrated. He may be charged for the loan. The bank owns the property if they have a mortgage on it. In reality the banks own the nation as people are buying their homes and do not own them until they are paid off. I wonder what percentage of homes in the U.S. are free and clear? He has homeowners insurance to protect the home. Now, Mr. Bulldozer may have to deal with the homeowners insurance company too, and they may file charges against him. We will have to wait and see.
Villian. I’d be surprised if this isn’t a criminal matter now. BTW, we never own our homes even w/o a mortgage. Just try not paying your property taxes and see what happens.
While I usually love “little guy” type stuff, this is just wrong. As discussed in a few other threads in the bloggernacle (BCC and FMH–relating to the morality of walking away from an upside-down mortgage, and/or getting foreclosed on), I don’t think there is a moral wrong in not repaying a loan if you at least had good intentions initially. The mortgage agreement you sign doesn’t say “I give my word to repay the loan,” it says, “I give my word to repay the loan OR give you the house if I don’t.” The house is collateral on the loan. Purposely sabotaging the collateral that you promised the bank in the event that you can’t pay is just as good as robbing the bank of that money. Stebbing is right that the bank’s protection against losing the collateral asset is that it is insured. By purposely destroying the house, he is now in trouble with the insurance company, who won’t want to pay out the claim to the bank in the case that the loss was not accidental.
That said, there may be complicating factors such as misconduct by the loan officer, etc. When we bought our house we agreed on terms of the mortgage–a second mortgage with a certain rate to cover part of our down payment, etc. When we arrived at the Big Day of signing all the papers, the paperwork they had for us had completely different terms. There was a big balloon payment that was NOT part of what we had discussed. It was horrible. We felt we had no choice but to sign, because we didn’t want to lose the house and the Big Day is purposely scheduled to be the last day of the escrow period. So we signed, and then got busy paying off that second before the balloon would be an issue. We were fortunate to be in a position to do so, and fortunate that both my husband and I are highly educated and caught the error. So I am sympathetic to people who got caught in schemes like that who didn’t catch the error. There were some crooked people out there in the heyday of home loans.
In one of the articles I read, the foreclosure on his home was related to his business. The equity in his home was also collateral for a business loan, and his business failed.
So in one point of view, it was his own fault for not shielding his personal assets from his business.
People also have to read the fine print of their mortgage before they walk away from it. They might still get “billed” for any negative equity in their home, if the selling price that the bank gets for it fails to cover the remaing balance of the loan. That is happening more and more. SO READ YOUR FINE PRINT, and get a lawyer to look over your mortgage contract before you decide to walk away from it and surrender the house. Surrendering the house may not absolve you from all legal obligations of the mortgage.
Sister blah, very good comment. Thanks.
Amen, Sister Blah!! Preach it!!! 😉
Had the man torched his house, he would be criminally charged with arson. Isn’t this similar?
Is the bank the bad guy, simply because this guy made some bad choices (such as putting his house up for his business)? I’m not one to applaud any bank or corporation that has trashed our economy, but at the same time, individuals also need to take responsibility for their own choices, as well.
His actions seem more like a childish temper tantrum than a bold move to fight the man. But it doesn’t seem evil enough for true villain status. I vote C). childish and stupid.
Villain. Willful destruction of the property of another is criminal offense. The property in this case is the equitable interest the bank had in his home. In Ohio, destruction of the property of another is a felony. If the amount is $100,000 or more, a third degree felony, punishable by one to five years in prison,
Even if this fellow doesn’t end up in jail, he is likely to end up with a non-dischargeable debt that he will be making payments on for the rest of his life.
It is worth mentioning, by the way, that the federal government (meaning you) guarantees the deposits of every commercial bank in the country. Behavior like this is not just a crime against the owners and shareholders of the bank, it is a crime against the population at large, who will suffer increased taxes, increased interest rates, and increased inflation as a consequence.
BTW, we never own our homes even w/o a mortgage. Just try not paying your property taxes and see what happens.
The alternative is getting the government out of the public safety business. Then, if you don’t pay for private security and fire protection something similar happens: your house is vandalized, burned to the ground, etc., and you have to hire a private detective to track down the offenders, a private attorney to prosecute them, pay very high court fees for the criminal case, plus private imprisonment fees to keep the offender in a private jail for an appropriate period.
This might (with insurance, etc) turn out more efficient than the current system, but that will be small comfort if someone burns your (uninsured) house to the ground and mocks you for not having the resources to pursue them in court.
Villain.
If he has to walk away and foreclose I don’t think that is a big deal. The bank gets the asset it paid for when it forecloses on a property. But if he destroys the asset it is no different than blowing up a car that is about to get repossessed. This guy should go to jail in my opinion (at least for a little while).
The man should definitely go to jail. And pay for the damage after he gets out.
What crime has he committed? Before you all decide to send him to jail, you’d better discover some crime that he’s committed. (And stupidity isn’t a crime–if it were, the jails wouldn’t have room to hold everyone!)
A bank that holds a mortgage does not own the property, unless and until it forecloses on the owner’s interest. Until that happens, the home belongs to the person named on the deed, not the mortgagee. The standard form mortgage contains a covenant by the owner not to destroy or waste the property, and he has clearly broken that promise–but the remedy there is a civil, not a criminal matter.
On the other hand, he does deserve a prize for stupidity, or immaturity. His actions are about what you’d expect of a two-year-old, the only difference being that most of them can’t operate a bulldozer.
The tax bit doesn’t make sense. If you owe someone and they sue you they can collect on your assets outside of bankruptcy rules. But of course many things are exempt to bankruptcy such as student loans. To suggest that you don’t own your house because legally your assets can be seized seems silly to me.
That’s just to claim there is no real property rights because rule of law lets people collect debts from you.
Now for the record I am in favor of liberal bankruptcy laws. From the arguments I’ve read there’s quite a bit to argue they help American innovation a great deal. But still, it’s also clear we shouldn’t have an anything goes bankruptcy law such that our house is immune to any debt collection.
As for shielding personal assets from business ones. That’s nice in theory – often in practice things get a bit messier.