Nevada has earned the unfortunate reputation for being both ground zero for the mortgage meltdown and the great recession at large (Senator Harry Reid). Some homeowners have been stripping their homes of anything of value in response to their loss. As a result, local politicians have proposed new legislation that would provide authorities the ability to charge individuals who intentionally damage a home during the stages of foreclosure.
During the real estate crisis, Nevada had a foreclosure rate 3.5 times the national average. Those vacant properties currently cover the region's landscape from Las Vegas to Reno. Regrettably a vast majority of those homes are no longer in decent condition as homeowners angered by their eviction notices have taking out their rage by stripping the homes of every appliance, copper piping, lighting fixture and more. Republican Nevada Assemblyman Peter Goicoechea, recently introduced the bill that would enable destructive borrowers to be charged with felony for their willful acts of vandalism.
Nevada, The Foreclosure State
For the past four years, Nevada has had the highest foreclosure rate of any state in the nation. According to February statistics from RealtyTrack, one in every 119 homes received foreclosure notification in February 2011. While a portion of the activity is due to homeowners being unable to manage their mortgage payments, nearly a quarter of them have opted for strategic default, despite having the resources to pay off their home loans.
Regardless of why the borrowers lost their homes, many of the properties have been stripped of the basic amenities that make a home livable for the next owner. The lackluster condition of the foreclosed properties has added additional challenges to a full housing recovery in town. The real estate owned properties are being sold "as is," and that is affecting neighborhoods, the livelihood of real estate agents and the bank's bottom line.
Lenders Fighting Back
Nevada's legislatures are not the only organization trying to make angry borrowers pay for their disregard for the law and acts of vandalism. In 2010 Fannie Mae started to work towards holding strategic defaulters accountable for the financial losses. After finding the proof of the transgression in transaction data, the agency would bill borrowers for any financial losses caused by the REO status, including any damage to the home in question.
If Fannie Mae's research shows that a property was willingly abandoned due to strategic default, the borrowers would be banned from getting a Fannie Mae backed home mortgage for seven years. The agency also reserves the right to pursue legal action in response to any additional debt levied by a defunct borrower.
Homeowner Vandalism Trend
There are no national statistics in regards to the monetary losses caused by homeowner vandalism, but the activity is real and growing. As a result, more states are creating legal policies for frustrated homeowners willfully partaking in the act.
In California, another state deeply impacted by the mortgage meltdown, laws exist for penalizing borrowers turned vandals. In state, intentional damages executed by disgruntle mortgage holders result in felony charges that may result in up to a year of imprisonment. Regardless of if a borrower losses their home due to their own financial misjudgment or courtesy of a robo-signer error, individuals are encouraged to walk away with their heads held high and the home intact or reap the consequences of the long arm of the law.
