Borrower Obligation to Preserve Property-No You Cannot Destroy even in Foreclosure!!!

We all know that foreclosures are part of the real estate landscape now and likely to continue for at least another year probably more.  Many borrowers are taking their frustration for their circumstances out on the house.  What do you suppose gets inside the minds of borrowers who think that it is the lenders fault they quit making their payments?  Now there are certain stories I have heard about where the lender receives the payments and does not apply them to the correct loan and forecloses anyway.  Those are probably the exception rather than the rule.  As an REO agent, I have seen a lot of things in my day...removing appliances, light fixtures, carpet, etc. I even sold one home that the borrower had removed all of the wall sockets and light switches and left bare wires hanging out. See video of a homeowner damaging his home.   http://www.clipsyndicate.com/video/playlist/8178 

What many borrowers do not know is that they are contractually obligated to maintain the home in marketable condition. This is part of the Trust Deed that borrowers sign that likely does not get read. The trust deed is a uniform approved form by Fannie/Freddie  so would apply to nearly all of the loans borrowers sign. This is the clause in the borrowers contract with the lender than allows the lender to seek recourse if the borrower damages the property during his/her ownership whether they occupy the home or not.

The borrower is also required to keep the home insured. So what happens if the borrower has missed enough payments that the escrow funds have run out and the home is no longer insured. Perhaps this is a liability issue that should be talked about with short sale sellers.  So what does happen if the house burns down or otherwise suffers from major damage?


 

 Borrowers should be encouraged to read through this legal document they signed when they borrowed the money to purchase the home.  Most lenders require at a minimum that the home have a functioning kitchen and bathroom and be in good marketable condition prior to approving the loan.  The obligation to keep the home in the same condition is encumbered with the loan. 

Please note that I am not an attorney and none of the information supplied here is presented as legal advice.  If you are facing this situation, please seek counsel of a reputable attorney.