Usually the lender prefers to lose $50,000 rather than pay an electric bill.
Foreclosing lenders turn down short sale offers after stringing everyone along for months or years. They scare owners off and scare tenants away if it's rented. Owners don't have money to keep utilities on in a vacant house for a year, especially while the bank toys with the seller's finances and emotions.
Banks ignore warnings
If our short sale clients move out and turn the utilities off, we notify the lender and plead with them to pay for utilities if there is a basement and a sump pump that needs to stay operational. The banks ignore our verbal and written pleas. Invariably the basement fills with water and mold contaminates the house.
Mold and three feet of water in the basement can easily cause $20,000 to $40,000+ of physical damage. Water heaters and furnaces get destroyed. Mold infests walls, joists and duct work. It works its way upward to infest upper floors; infesting carpets, walls, baseboards, closets and cabinets.
Vast areas of the house then needs gutting and reconstruction. It needs expensive professional mold remediation. Mold remediation doesn't always work. Missed spots can regenerate. Can you really be sure that the mold didn't infiltrate behind walls that weren't gutted and treated?
Diminished Resale Value - How Do You Even Measure That?
The house is tainted forever as the seller and all subsequent sellers must disclose on the Seller's Disclosure that the house has or had mold infestation. In addition to the dollar cost of remediation and renovation, the lender has to reduce the resale price of the REO to reflect the lower marketability and lower resale value of a forever stigmatized house.
Would You Move Your Family Into A Mold Infested House?
Would you buy a house and move your family into a house with such a history? I wouldn't. Why would I? There are hundreds of other houses on the market without such a problem. How much additional discount would you want to take the risk? $10,000? $20,000? Not enough money in the world?
All this because the foreclosing lender refused to pay the minimal electrical bill to keep the sump pump working while they drag their feet on failed short sales and failed loan modifications.