Real Estate: The anatomy of an eviction

When we go to a closing, the settlement officer explains to the buyer the terms of their mortgage and the buyer's responsibilities regarding their loan. In a nutshell, you often hear those terms described with the phrase, "If you pay you stay, if you don't you won't." For people who get behind on their payments, banks make every attempt to work out some solution. They will explore refinancing, loan modifications or a possible short sale, all before proceeding with the final resolution, which is eviction. This ultimate step in the process isn't one anyone wants to take. It's obviously unpleasant for the homeowner and a significant expense for the mortgage holder. By the time you get to an eviction, everybody is going to lose. Last week, we attended an eviction, so we thought our readers would be interested to know exactly how it works.

First, a sheriff shows up. The sheriff is there for a couple of reasons. The homeowner knows this is coming, and they've been notified of the exact time and date for the eviction. But, as you might expect, some people can get a bit testy about being thrown out of their house. So the first order of business for the sheriff is to make sure everything proceeds in a calm and professional manner. In the particular case we attended, the property owners were there and the Sheriff confirmed with them that they had removed any personal belongings they wished to take with them. They said they had everything they wanted, and then they just left. This time, there wasn't any fuss or drama. The sheriff told us that's usually how it goes. Once you get to the point of an actual eviction, people have often resigned themselves to their lack of options, and they've probably already blown off any steam over the event. The results of their frustration can usually be seen in the house. When people get evicted, they don't vacuum and clean up before they leave. This house was trashed beyond all comprehension, which is a primary reason why banks don't want to go down this road. The pride of homeownership had clearly been replaced by an act of revenge. There was trash everywhere, holes in the walls and something that once was a pretty nice house had been reduced to a scene of complete destruction.

Next, the sheriff walks through the house to make sure everyone is really gone and determine if any valuable personal property has been left. If there are personal items of reasonable value present, they are taken to the curb, presumably to give the previous owner one last chance to get their stuff. In this house, there was nothing of that sort, and the Sheriff declared the property a "trash out," meaning what's left can go to the dump. At that point, two other crews show up. A locksmith comes to change all the locks and secure the property. The second crew is a company that specializes in clearing the house of all debris. They came with 10 men to clean the house out, but at this property there was so much strewn about that they just took pictures to assess the cost of clean-up and determine the size of dumpster needed to do the job. The trash out crew said they had seen worse, but this one was pretty bad.

In addition to the sheriff and clean-up crew, a real estate agent also attends the eviction. The agent collects the keys from the locksmith and begins the process of getting the house sold. The initial job of the agent is to make a judgment as to whether or not the house is in adequate condition, or can be repaired, to meet the requirements of a FHA (Federal Housing Authority) mortgage. If the house doesn't meet these standards or the cost of repairs would be excessive, then the property must be sold "as is" to a cash buyer, someone with a conventional loan or using an FHA 203K mortgage. A FHA 203K loan allows a buyer to roll the rehab costs into a loan that also covers the initial purchase price. Should the house be repairable, the agent identifies what needs to be done and assists in sourcing the necessary contractors to ready the property for sale.

An eviction is a sad experience. You can see the remnants of what, at one time, was probably a pleasant home, things like children's toys and other leftover personal items that were the joy of someone's life. Plus, when you look beyond all the garbage and damage, you can also see what previously had been a beautifully constructed house. Some evictions come to pass because of unfortunate circumstances like the loss of a job or an expensive illness. Others are the result of a homeowner who simply failed to act responsibly. Regardless, the only silver lining is the hope that soon another family can rebuild these properties and restore the house to a happy home.

Tip of the week

The $8,000 tax credit for first-time homebuyers was set to expire at the end of this month. On Wednesday, the United States Senate passed a bill that would extend this credit, as well as also offer a $6,500 tax credit for people who aren't first-time buyers but have lived in their previous home for at least five years. Under the Senate measure, you would need to sign a home purchase agreement by April 30, 2010 and go to settlement by June 30, 2010. The Senate bill is also expected to pass in the House. Once the bill is signed into law, we will give you more details.

Bob and Donna McWilliams are practicing real estate agents with more than 20 years of combined experience in the Annapolis area. Their Web site is www.BobDonna.com, and you can e-mail them at McWilliams@BobDonna.com.