What is Home Stripping?
Home Stripping is when a Homeowner going through a Foreclosure removes fixtures from the home before or after they lose the home to Foreclosure. This includes (Light Fixtures, Stoves, A/C Units, Bath Fixtures, etc.). These fixtures wind up on places like CraigsList or at garage sales.
What is a Fixture?
A fixture can be classified as anything that is attached to Real Property (Home). If you can’t just pick it up or roll it out it could be considered a permanent fixture. If you need a screwdriver or wrench to remove an item then it is probably a fixture.
Is this Illegal?
It can often be difficult to prove, but it can be considered illegal and you could be prosecuted for it. There have been a handful of arrests in the Valley over the last month and these people are being charged with criminal damage and defrauding a secured creditor, both are Felony offenses.
Who is the Victim?
Not only are the Banks who secured these loans the victims, but so are the neighbors. What Stripping a home does is it devalues the home. Someone has to pay to put the fixtures back into the home, either the bank when they are Marketing these homes or the new buyer. Most likely scenario is the bank will be forced to discount the price of the home so that the new buyer can replace the fixtures. This can have an adverse effect on the values in the whole neighborhood. So your next door neighbor who may need to sell his home within the next 6 months may be forced to sell his home lower because of the devaluation caused by the removal of the fixtures in the neighbors house.
What if I am trying to Short Sale my house before a Foreclosure? And, I remove fixtures?
Officially, unless the Bank or Mortgage Company has taken ownership of the property there is no crime. But, I would contend that your neighbors are still being victimized by the devaluation of removing fixtures. Here is something else to consider – If you are trying to successfully Short Sale your house, don’t you want it to Sell? You can be greatly hurting your chances of Short Selling your house if you remove fixtures. The home still needs to be Marketed and would you rather Buy a home that has no light fixtures or bathroom sink or the one down the street that does??
All information I have written is based on my opinion and experience from my years working as a Real Estate Agent as well as a Wholesale Mortgage Account Executive.
Mike Jones
RAUKOV,LLC
Director of Sales
(480) 747-2835 – direct
Guardian Realty & Investment Group
Realtor
One of the most difficult concepts to grasp in the Credit/FICO world is “What is the difference on my Credit Report if I choose to do a Short Sale compared to a Foreclosure”. Well I am here to give you my interpretation.
In Short it Depends
If you are currently going through a Foreclosure or a Notice of Trustee Sale, then you must be at least somewhere between 90-120 Days Late on your Mortgage currently. That means you have already done the same amount of damage to you Credit as that of a Short Sale. Even if you have had perfect Credit your entire life, the day that Credit Report shows that you are 30 Days past due on your Mortgage your FICO score probably dropped between 50 – 100 points. As you go 60 and then 90 Days past due it continues to drop. This is going to take about 2 years to work its way out of your credit score, regardless of what you do from this day on. A Short Sale will have the same effect on your Credit as the aforementioned scenario time and score wise. Even if you have some big Windfall (Lottery, Inheritance, etc.) and you pay off all your debt; your Credit will still remain the same as it is today because you were past due on your mortgage within the last 2 years.
What If I Just Let The Bank Foreclose?
If your Home goes to Foreclosure, meaning the Bank Auctions off the property, your actual FICO score should be effected about the same as would a Short Sale. It is however, the “How Long it Will be affected” that you have to worry about. There are 2 sections of your Credit Report:
#1 – your Trade Lines (Your Mortgage, Car Loan, Credit Cards, etc.)
#2 – your Public Records, where a Foreclosure reports. This would also be where Bankruptcies, Tax Liens, Judgments and Collections report. From my experience a Foreclosure on your Public Records will stay there from anywhere between 7 and 10 years. Meaning, this could be a burden on your Credit Score and your for close to a decade.
Keep this in mind as well, if you are applying for a job and they want to do a background check on you, many companies may pull your credit report. Do you think they care that you had a Late Payment on something or do they care about what is in your public records? My guess is that they would be looking at your Public Records.
The long lasting effects of a Foreclosure on you Credit Report can not only influence whether you will get a Mortgage sometime in the near future it can also affect your Credit Card Rates, your Car Insurance Rates and whether you get that new job that you are vying for. A Short Sale can be a very good solution for someone in this day and age. 2 years compared to at least 7 years is a big difference. Make sure you weigh all your options and make the decision that is going to be right for you and your family.
All information I have written is based on my opinion and experience from my years working as a Real Estate Agent as well as a Wholesale Mortgage Account Executive with companies such as Bear Stearns and Fremont Investment & Loan.
Mike Jones
RAUKOV,LLC
Director of Sales
(480) 747-2835 – direct
Guardian Realty & Investment Group
Realtor
