Written by Craig D. Robins, Esq.
Being in Foreclosure is Bad Enough but Don’t Compound Problems by Damaging House in Retaliation
Public sentiment these days is that mortgage banks are evil for bringing so many foreclosure proceedings against suffering homeowners in a difficult economic climate, especially when there are frequent headlines about lenders engaging in shoddy and improper foreclosure tactics.
So whether justified or not, many homeowners are angry that the big banks are seeking to foreclose on their homes when times are tough. Some of these angry homeowners want to “get back” at the bank. However, if you are a homeowner in a foreclosure situation, be careful how you vent that anger.
Foreclosure Rage Becoming More Prevalent
There are numerous stories of homeowners in foreclosure who have intentionally damaged their homes upon moving in an effort to punish the bank — something we can call “foreclosure rage.”
Some homeowners are taking out their frustration on the lender in an effort to get even by vandalizing their own home.
While it is usually acceptable to take items of reasonable value, such as appliances, others, in an act of foreclosure rage, totally gut the home, strip it of almost everything, including flooring and plumbing, and then maliciously inflict serious damage by destroying walls, pouring cement down the toilet, creating floods by leaving the water on, and exposing the house to the elements and vermin by removing windows and doors.
However, as one recent case shows, the immediate emotional relief that damaging the house brought was certainly not worth it.
One Homeowner Goes on the Foreclosure Rage Rampage
A homeowner who went on the war path against the mortgagee in a fit of foreclosure rage recently paid the price.
Michael Zahniser of Illinois had just been served with foreclosure papers. The next day he removed the back door of his house and stripped the interior. He also removed cabinets, countertops, doors, light fixtures, gutters, pieces of siding, and tile floors. He left the house with no door and a gaping hole in the wall.
He subsequently filed a Chapter 7 bankruptcy to eliminate any obligation on the mortgage deficiency, and presumably to eliminate other obligations like credit card debt.
The mortgage lender, Byron Bank, was not amused and brought an adversary proceeding
in bankruptcy court arguing that Mr. Zahniser should not be able to discharge his obligation to the bank under Bankruptcy Code section 523(a)(6). That section provides that debtors who willfully and maliciously injure someone’s property cannot escape liability for doing so.
Last month, the bankruptcy court found that the bank proved that the debtor intended to cause injury to the bank’s interest in the house and that the debtor acted willfully and maliciously.
The bankruptcy court also determined that the items that the debtor took and the state that he left the house in demonstrated that he was not merely trying to collect what would have been valuable for himself, but rather, that he was trying to deny value to the mortgage bank.
In determining what part of the bank’s deficiency claim should be non-dischargeable, the court ascertained the amount necessary to rehabilitate the house, and that amount was $50,000. The court also added $19,000 in attorney’s fees to that. The case is Byron Bank v. Zahniser, 2010 Bankr. LEXIS 4623 (Bankr. N.D.Ill, December 13, 2010).
In some ways the homeowner here was lucky. The bank sought to have the entire deficiency held non-dischargeable. However, the court only permitted that part which was caused by the malicious injury to be non-dischargeable.
Almost all mortgages have boiler plate language that prevents a homeowner from engaging in this type of conduct. If you are a homeowner in foreclosure, think twice as to how you should vent your frustration and anger against the bank.