Sep162011

Tales of foreclosure and eviction: putting people out of their former houses

Some foreclosure and eviction cases can be heartbreaking. However, we live by rule of law in this country, and unless we want to start giving away real estate to those with the saddest story, these evictions must take place.foreclosure_notice

Elderly woman, 101, in tears as she’s evicted from her home and her possessions are thrown into dumpster

  • Texana Hollis’s son failed to pay her property tax
  • Detroit woman had lived at her home for 58 years
  • Rushed to hospital after eviction over heart attack fears

By Paul Thompson

Last updated at 7:44 PM on 13th September 2011

A 101-year-old woman has been evicted from her home of the last six decades after her son failed to pay property taxes on time.

Texana Hollis’s possessions were thrown into dumpsters after bailiffs moved to take her house in Detroit, Michigan.

The 101-year-old was left in tears and disorientated after she was ordered out of the property that has been her home for the past 58 years.

That is about as sad as it gets. The house was paid off, and the 101 year old woman lived there for 58 years, and now she is homeless.

Officials said her 65-year-old son Warren had failed to pay property taxes for up to seven years.Although the home was owned outright by Ms Hollis he had ignored repeated warnings that they faced eviction.

Now we see what is really going on. The son wasn’t paying the property taxes. My guess is he wagered nobody would foreclose on the home as long as his aging mother lived there, so he just stopped paying.

What was the taxing authority supposed to do? Let these people live there tax-free? What about the other taxpayers who aren’t getting a free ride?

Perhaps if we pass a new law that says if you live past 95, you don’t have to pay property taxes, then it might be okay. It might not be a bad law. But until that law is passed, regardless of age, people have to stay current on property taxes if they want to stay in their homes. This house was enjoying the benefits of police and fire protection without its owners paying a fair share of the bill.

Warren said: ‘I kept it from her because I did not want to worry her.’

He also admitted that he knew they faced eviction, but thought it would not happen.

Yep. He bet they wouldn’t foreclose and lost. What a fool! Whatever bad circumstances befall this man, he richly deserves. It’s his fault, not the foreclosing tax authority.

Ms Hollis wept as she told her local TV station that she only found out about the back taxes the night before she was evicted.

Hours after being evicted Ms Hollis was rushed to hospital over fears she might have had a heart attack.Friends later said did not suffer a heart attack, but was stressed over the incident.

I can only imagine how awful that must have been for her.

With no place to stay a neighbour agreed to let Ms Hollis and her son stay at her home temporarily. But neighbours are questioning why the local authority would want to turn a 101-year-old woman out on to the streets.‘This woman needs to be back in her home now,’ one angry neighbour said.

Local businessmen are looking to see if they can pay the back taxes to allow Ms Hollis to move back into her home.

I hope they raise the money to pay off the tax bill. They should keep a lien on the property, and the moment this lady passes on, they need to boot the son to the curb with no mercy.

My family’s eviction story

My grandmother’s blind sister was 82 years old when she was evicted from her paid-off family home for a highway construction project. True story.

Rather than wait a few more years for this ailing elderly blind woman to pass on in her lifelong home on the lake in Friendship, Wisconsin, the Department of Transportation decided it was time to straighten out a dangerous corner around the edge of the lake by wiping out my great-aunt’s home.

This incident was very sad, and my great-aunt died in a nursing home shortly thereafter emotionally devastated by the event. Her son kept the bitterness alive for years thereafter.

My senior citizen eviction story

When I bought 19 Tierra Buena, Las Vegas, NV 89110, it was occupied by a widow whose husband had passed a few years earlier. Since they lived in Las Vegas, any stored savings they had in home equity was wiped out in the housing crash. She quit paying in 2008 and got about two and one half years of free housing before the bank finally foreclosed. Jacki and I were both saddened by her circumstances.

We offered her $500 to leave the property, and she agreed. We sent her a check to the address she gave us, and it was sent back to us. The post office couldn’t find her at the address she gave us. After a couple of weeks, we still hadn’t heard from her.

My conscious was bothering me, and one night I woke up at 3:00 AM thinking about this poor woman. It occurred to me to simply mail the check to the 19 Tierra Buena address to see if the post office would forward it to wherever she really was. Jacki resent the check, and a week later, it cleared our account.

I could have saved $500. She made no attempt to contact us after she left. I couldn’t live with the idea of saving $500 at the expense of a widow.

My least favorite former property owners

These stories were so irritating for me they are worth recanting again here….

Squatters on my dime

I have one property I purchased in November, and the former owners are still squatting there. The former owners pulled an interesting legal move. They had the wife file for bankruptcy in her maiden name a few days after the foreclosure auction, and they put the property into the estate. Well, our search didn’t pick up the bankruptcy because it wasn’t in the owner’s name, so we began foreclosure proceedings. Late in the process, the bankruptcy attorney accuses us of harassment, and we had no idea what he was talking about.

Once we discovered the suit, we had to initiate our own suit to have the property removed from the bankruptcy proceedings. They didn’t own the property when they filed, so they can’t obtain protection from the bankruptcy court to stay there. If they had filed before the foreclosure, they would have had other rights, but if they had filed before the foreclosure, it would have shown up in a title search, and I wouldn’t have bid on the property.

The cost of all this legal maneuvering is expensive. The time to properly evict these people has been costly in two ways. First, the declining market means my resale price is declining while i wait. in addition, I have opportunity cost on money tied up in a non-performing asset. I am not a bank. I can’t amend, extend, and pretend I am making money. I either sell quickly for a profit or I don’t profit.

Ye ol’ crack house

By far the most bizarre story I have is a property I purchased in October.

Back in 2005, a recent Salvadoran immigrant obtains his citizenship. With his workman’s salary and a penchant for liar loans, he puts together an empire of 8 properties in Las Vegas from 2005 to 2007. The last of these properties was his crown jewel — the property I bought.

The property is in a older Las Vegas neighborhood called Spring Valley. The neighborhood is dominated by ranch style houses ranging from 1,400 SF to 1,800 SF. It has seen better days, but this is not a bad neighborhood. It is mostly median income middle-class families trying to get by.

My property is the large 5 bedroom home at the end of a cul-de-sac. It is the only one in the area with a large pie shaped lot with an outbuilding and RV parking. Back in 2007 when Vicente the Fox, our recent immigrant, bought this property with his liar loan, it was the finest property on the street.

Vicente the Fox began using his large property as a salvage yard. He put individual locks on all the bedroom doors and leased out the rooms to boarders and skimmed their rent. He tried to convince them to keep paying him even after I bought the house.

The boarders were united by their love for crystal meth. There is no evidence this place was used as a meth lab — thankfully — but when the constables came by to evict the last boarders, they confiscated a cigar box full of used pipes and other paraphernalia. In the two weeks after we took possession, the house was broken into three times.

The amount of junk on this lot is staggering. There are eight automobiles on this property, and none of those are in the garage because the garage was full of stuff. All eight cars are in the back and side yards. There were 4 working refrigerators on the property, a dirt bike, an air conditioner, anything and everything you can imagine, and lots of it.

I call our former owner Vicente the Fox because he carefully avoided us whenever we tried to serve him formal eviction papers. He didn’t live at this house, and his former address is an apartment where he skipped out on the rent. However, since I was unable to serve him, I could not fully divest him from the property and the junk sitting on it.

He teams with a local attorney bandito to shake me down for wrongful foreclosure, stealing his property, and so on. Since I couldn’t get him served, his weak case was strong enough to tie me up in court for a while. I settled.

Surprisingly enough, it turned out in my favor because when I let him back on the property to get his stuff, he cleared out much of the garbage along with the stuff of value. My worst fear was him picking over the good stuff and leaving me with a $5,000 mess to clean. He took a number of paint cans and other items that would have required me to bring in special disposal teams.

There is no good resolution for this property. I will lose money on the deal, and Vicente the Fox will have a roving pile of garbage scattered at friends and acquaintances houses all over town.

Eventually, this property will get sold. Hopefully, it will be to a good family that restores it as the jewel of the neighborhood. That’s the outcome I want.

Flippers are maligned for bringing down the quality of life in neighborhoods. The reality is that the delinquent former owners are the ones who brought down the neighborhood. Flippers like me are the ones taking back the crack houses from rent-skimming former owners and putting families back into them.

I just rented Stober Court to a section 8 government assistance tenant. I had no idea such tenants could get $1,350 monthly rent allocations. She nearly broke down in tears when she saw the cleaned, painted, and repaired property. I felt good about that one.

Let’s not forget, New families find the houses lost in foreclosure.

Merry Christmas and happy new foreclosure

 

I bought this house on December 7, 2010. The above was the actual picture of the property I used to evaluate it as a potential flip taken the morning of the auction.

Do you see the carefully groomed landscape and the Christmas reindeer in the front?

These people liked this house, and they didn’t want to lose it. I was buying it eight days before December 15th when the local constables who handle evictions stop all activities for the holidays.

Was I going to be Grinch this year?

Cash-for-keys

I always prefer a negotiated settlement to eviction. It takes too much time to evict, and the occupants aren’t too careful on their way out with their belongings.

These former owners have few tenant holdover rights. If i want them out, I can have them forcibly removed in short order. In Nevada, they get a 5-day notice to get out followed by a 3-day notice before the constable arrives to remove them by force if necessary. This is dangerous work, and they do carry weapons.

Technically, the former owners owe me rent from the day of the foreclosure sale. The typical negotiation is to offer free rent for three weeks with cash incentives if they move out quicker. The cost of money dictates that i can offer up to $500 per week if they are out early, and it improves overall revenues and profits.

I wasn’t about to expedite an eviction to see if I could kick this family out two weeks before Christmas. We negotiated a deal where they could stay until January 10th if they agreed to leave certain appliances, be careful when moving furniture, leave the fixtures and fans, basically leave the place undamaged so we can do preparations for sale quickly and with limited expense.

Sue for unlawful foreclosure

We needed to exchange written documents, and they avoided meetings until it became apparent to us that these occupants did not intend to follow through on their agreement. Just before Christmas, we received a lawsuit notification, and with the justice system basically shut down the last two weeks of the year, we had no options, and the holdover owner got one last peaceful Christmas in their former dream home. I truly hope they enjoyed it. Denial has its rewards.

On the 3rd of January, we filed suit to get them removed, and after some legal finagling, we got a 30-day notice filed with a calendar set to expire in early March. These owners genuinely believed they were somehow going to keep this house. After more than two years with no payments, their house was called to auction, and now they are no longer on title. Only their bodies and their possessions remain.

As the eviction clock is winding down, we get a communication from the owners asking us if our original cash-for-keys offer was still on the table. They would get out that weekend if I gave them $1,500. Of course, my first thought is, screw you, you’re willing to take my money after lying to me, suing me, and generally pissing me off. Go to hell! After a few moments to think rationally, I sent Jacki over with a big smile on her face to agree to their demands.

They got out in a weekend, I got the house in immaculate condition — I knew any loan owner in foreclosure who bothers to put out decorations and maintains their yard that well probably maintained the inside well. They did. We got the house on the market the next weekend (last weekend) with minimal fix up expense.

A bitter pill to swallow

These former owners loved this home. Jacki told me they were very bitter about the entire situation, the failed appreciation, the failed dodgy loan, the failed loan modification, the failed attorney savior. Despite the anger and bitterness, after telling their story, they were polite to Jacki when she inspected the property and paid them off.

When I think about borrowers like these, I do wish it had turned out differently for them. This particular family were peak buyers. They paid $399,991 for a property I bought 5 years later at auction for $170,000. The comps have weakened since I bought this property, and I will likely have to discount it to move it. These owners owed double what this property is worth today. What were they supposed to do?

The new family that buys here will enjoy a substantially lower cost of ownership. instead of the $2,500+ monthly cost the former owners had, the new buyer will spend less than $1,200 a month to live in this place. These people won’t have HELOC riches any time soon, but they will have a cost-of-living that leaves them enough spending money that the HELOCs aren’t necessary.

What is the best resolution for properties like this one? Do we give every existing loan owner principal reduction to keep them in place? Forgive the Ponzis their debts at my expense? I wouldn’t feel very good about that one. Would you?

Do we allow them to squat forever and deny the new family their home? Perhaps foreclosure is a good solution after all.

The angry immigrant

When I bought 1915 Canterbury, the house looked unoccupied from the photographs. When Jacki went over and had the locks changed, she found an empty house. No furniture, no beds, not kitchenware, no obvious signs of habitation. However, she noticed the coffeemaker had recently been used. There were a few items of food in the refrigerator, and the bedroom floor had a bedroll sitting on the bare wood floor. She thought this was odd, but there were no other signs of occupancy.

About 30 minutes goes by when a little Russian guy pulls up, barges in the house and starts screaming at Jacki. Fortunately, she was there with the locksmith and the burly landscaper who weren’t keen on the way this man was speaking to Jacki. It nearly came to blows.

The police came in and Jacki negotiated the deal of cash for keys with two law enforcement officers standing over them. He got $750 of the $3,000 he was asking for, and we got to keep some of his appliances. It turned out okay, but it was a harrowing experience.

The unemployed

Most of the occupied houses I have purchased have unemployed former owners squatting in them. From what I have observed, strategic defaulters tend to move out before the foreclosure date and get on with their lives. It’s the people who have no other options that stay on in the property. I offered all these people the chance to stay on as renters, but none of them could afford it.

370 Manzanita was occupied by a musician who worked infrequently during the recession and didn’t make his mortgage payments consistently. He also tried to get $3,000 cash-for-keys, but when we explained to him we could evict him for $500, he thought it wiser to take the money.

3225 Rose Valley was occupied by an unemployed construction worker. He had no money and no prospects. We gave him $500 and sent him on his way. I have no idea where he ended up, but it was undoubtedly not as comfortable as the place he left.

112 Rancho Vista was occupied by a construction worker who recently found work in Mexicali, Mexico. He was coming home on weekends to see his wife and kids. Rather than take the cash, we offered them to stay on for three weeks. They got their affairs in order and moved out by the agreed upon date. They were struggling, but the father was a hard worker doing what he could to support his family. I hope they make it.

I could go on, but this post is long enough.

Evictions may seem heartless, but we have these laws in place for a reason. If occupancy was the only requirement for ownership, our entire system of property ownership and finance would cease to function, and thuggery would determine who got to live where. Most often people who are being evicted have made poor choices. Remember, Responsible Homeowners are NOT Losing Their Homes.