What if they only did it to pay for college?

Getting ready for work this morning, my wife turned on our combination TV/DVD player to remove the Netflix movie so it could be returned (The movie was I Love You, Man, which is much more her kind of humor than mine, but it wasn’t a bad movie). While the television was on, we saw a brief news story about ongoing FBI investigations into former home”owners”^[a] who stripped everything from their homes when they went into foreclosure.

First, I just want to say that these homeowners are clearly in the wrong. Nothing I’m about to say should be read as me defending them. What they’re doing is selfish, childish and clearly immoral. I’m just not sure what the basis is for making it illegal. This article has the only real justification I’ve found, and it’s pretty questionable, I think:

FBI Special Agent Julie Halferty is part of a FBI mortgage fraud task force now investigating foreclosure homes that have been stripped.

“When you sign the deed to the home, you agree not to devalue the home. Stripping it is devaluing the home and that’s illegal,” said Halferty.

Okay, I’m not a homeowner, but the deed says you can’t devalue the property? How does that work? Is it illegal to remodel your home (which would devalue the property briefly while preparing to increase the value later)? My guess would be that these people purchased homes in developments with Home Owners Associations, or that Special Agent Halferty misspoke, and the rules about not devaluing the homes is in the terms of the bank loan rather than the deed^[b].

Either way, I accept that the FBI’s involvement probably means there’s some facet of the law that actually does make this sort of behavior illegal^[c]. But… should it be illegal?

I can understand it if it’s in the bank’s loan contract; these are secured loans, and they need some reassurance that the people living in the home won’t deliberately devalue it. The Home Owner’s Association’s interest is understandable as well (though I abhor HOAs and absolutely will not, ever purchase a home that falls under the rule of the petty tyranny of HOA busybodies). Still, I can’t help but think that this sort of “law” is questionable.

What if a homeowner was in the middle of remodelling, lost his job, and was then foreclosed on? He wasn’t intentionally stripping the house, but he’s broken the law. What if a homeowner discovered that the cabinets that were installed contained a nasty chemical that could potentially leach out of the cabinet material and poison his family, and the unexpected cost of clearing out the cabinets pushed him into foreclosure? These hypothetical men have done the exact same thing as our lawbreakers, and I can’t argue that they’ve done anything wrong. What if the cabinets were removed and sold to try to make the payments?

In this case, where the exact same behavior is treated differently only because of what’s going on in the individual’s mind, it seems like there’s no real way for us to prove whether a crime has been committed or not. I can’t come up with any other situation where that would be the case (murder vs. a killing in self defense isn’t the same thing, as there’s more going on than just what’s running through one’s mind).

One last comment that’s not really related to the main point of this post – the second article I linked also mentioned that only people who have the cash can buy these homes, because they’re not eligible for traditional financing… but aren’t the homes owned by a bank at this point? Can’t the bank make some sort of special deal?

1. I’m going to leave those quotes out from here on out, but you don’t own anything that has a lien against it, and the fact that foreclosures are even possible prove that. Of course, I’d make the same argument about ongoing government rent property taxes, though, so what do I know? [↩]
2. There’s an interesting side point here, I think; what if one of the homeowners’ neighbors was a bank loan officer, and it could be proven that he helped these people get the loan for a house they really couldn’t afford (Alternate scenario – he’s a politician who voted for requiring banks to make riskier loans in the interest of helping the “underprivileged,” which helped him win votes from the aforementioned “underprivileged”). Is he then responsible for devaluing his own house (as the article mentions, the devaluing of a neighbor’s house hurts the value of one’s own home)? [↩]
3. I’m really curious about what makes it an FBI case, though. Either a contract or a local deed was violated; neither of which seems like it should involve the Federal Bureau of Investigation. Maybe some kind of Commerce Clause invokement based on large banks that also have offices out of state? It seems like a stretch, but that’s the best I can come up with. [↩]