Is it morally wrong to buy a foreclosed home?

[Cant trust em]

Apparently home sales were good in October. A lot of that is due to people buying foreclosures and short sales. Is that wrong? This might be some people's only shot to own a home. Should they care how the house got on the market? Is this taking advantage of other people's misery? Does holding out really make a powerful statement to oppose what the banks are doing?

Please discuss.

[Zywiec]

1. I don't think it's morally wrong to buy a foreclosed home. n/t

[Jackpine Radical]

3. Neither do I.

[Luciferous]

2. Why would it be morally wrong?

The new buyer didn't force the old owner into foreclosure. Should the houses just sit there and deteriorate?

[Cant trust em]

6. Some dude posted that it's taking advantage of other people's misery.

"Bottom feeders"

[Stinky The Clown]

13. That was me. It is not morally wrong.

That comment you cite was a commentary on the state of the economy, not the morality of buying a foreclosed house.

The bottom of the market is booming as bargain hunters - bottom feeders - are wading in and buying things.

[Cant trust em]

17. Damn. You're making my post a lot less relevant.

haha.

[Luciferous]

18. Some people might not be able to afford a home

otherwise. Others might just be trying to get the best deal possible. I don't think that they are bottom feeders. Maybe the person who posted that comment had a personal experience that made them feel that way :shrug:

[Stinky The Clown]

23. What's wrong with the term "bottom feeders"?

They're shopping the bottom of the market. That's a fact. They're in a very depressed market and making low offers.

That's a fact.

Why the umbrage?

[Cant trust em]

27. It's pretty negatively loaded.

I can't think of another example right now, but I'll keep you posted.

[Stinky The Clown]

43. So the issue is actually the choice of words and not the actual topic?

[Cant trust em]

48. When you use loaded words it puts your value on it.

It adds something to just a description of a transaction.

[Luciferous]

28. Because you make it sound like they

are morally reprehensible for buying foreclosures. The term has negative connotations, and if you were simply referring to people shopping at the bottom of the market, you could have used another term. Should the homes just sit there? What do you suggest we do with all of the foreclosures? I would rather have someone buy them than have them sitting empty.

[Stinky The Clown]

41. "I would rather have someone buy them than have them sitting empty. "

So would I. And I said so. :shrug:

[PVnRT]

73. Then why use a negative term like that?

Either you really don't think "bottom-feeder" is something negative (I doubt it) or you're just being deliberately obtuse.

[SOS]

72. In the 1930s, farmers simply blocked the foreclosure auction

"The Great Depression was hard on farmers in the early 1930s. Many could not pay the mortgage. Banks would foreclose on the property and sell the farms at public auctions.
Farmers would gather on the day of the auction and make it clear to officials and potential bidders that bids from outside the community were not welcome.
When the bidding commenced, someone in the crowd would start it off at fifteen cents and it rarely got beyond a few dollars before the bidding stopped and the auctioneer would close the sale. If anyone might be so ignorant as to put in a serious bid, a suitably burly man would step up with the words, 'That bid's a little high, ain't it?'""

Penny auction photo:


And the result of this concerted community resistance?

February 17, 1933: The Iowa state legislature has passed a foreclosure moratorium law that will keep banks from foreclosing on farms unable to cover their mortgages. The growing number of "penny auctions" and the threat of violence at farm auctions led to this measure.

No moral conundrum. The people organized and defeated the banks.

[Codeine]

35. Self-delete. Too snarky

[Cant trust em]

39. You are a model of self-control.

[Codeine]

4. It's more moral to let it rot?

That's just a stupid question.

[onehandle]

5. No. It's the system thats morally wrong. I wouldn't feel bad about getting a good deal. nt

[izquierdista]

33. You're right, it's the system

I did some work on a foreclosed house last week. It is rapidly deteriorating, and the bank is just now realizing that the value they have on their books bears no relation to the reality of the leaking roof. They will have to mark it down FAR below its last valuation for it to be a "good deal". I'm beginning to think that Mother Nature is the worst tenant a building owner can have, since people will do something when the roof leaks or the pipes burst or a tree branch blows through a window.

Anyone who has ever worked construction knows that building and maintaining a house is hard work, and banks just piss it away when they foreclose and leave it to become a victim of the elements. I would like to see more foreclosed owners able to stay in their homes as renters, with the possibility of redemption, as some more enlightened jurisdictions are doing.

[Naturyl]

78. True, but if you use a system you know to be wrong to your advantage

Then you are complicit. Just saying...

[conscious evolution]

7. Depends,imo

If you are buying up multiple houses for speculative resale,then yes,it is wrong.
If you are buying because you have a chance to finally own your own home then I say go for it.

[Cant trust em]

10. What if you buy houses planning to own them to rent out?

You become the landlord.

[conscious evolution]

37. No problem with that

Just don't become a slumlord.That I have a problem with.

[no_hypocrisy]

12. Agreed, buying them to flip them is ethically wrong.

Making a profit from someone's misery.

[Stinky The Clown]

30. Why?

Its a legitimate business.

I find it distasteful for *me*. But not immoral.

I own two other properties apart from my house. I've owned them for years. They generate some very modest income.

[Naturyl]

77. Making equipment for Auschwitz was also a legitimate business.

And in fact, that's just what IBM did.

Doesn't make it morally right.

[Captain Hilts]

8. That's a really good question. nt

[Cant trust em]

22. I'm full of 'em. That's because I'm a deep thinker.

:rofl:

[sendero]

9. It could well be argued...

... that it is the opposite of a moral wrong. It is taking another house off the market which helps stabilize prices.

The bank is going to foreclose no matter what. The buyer is completely blameless in this scenario.

[Robb]

25. Well, if we're going to get picky...

...the bank wouldn't foreclose if they didn't know there was a buyer out there. The buyer enables the bank to foreclose.

I think we'd best call it an amoral decision. :D

[customerserviceguy]

52. The bank doesn't "know" there's a buyer out there

at least not at a price where they can get their money back. And, yeah, they do lay out money. Money for the loan, money to pay interest on that money while they're not getting any back, and money to maintain the taxes and some nominal insurance on the place.

If foreclosures were not allowed, then nobody would ever be able to borrow money to buy a home. No home sales, and you have a small ownership class, and a very large renting class.

How's that for amoral?

[anigbrowl]

63. Not true at all

I know foreclosed properties that sit on the market for weeks or months. The bank most certainly does not know there's a buyer for a given property, only the general state of the market. You are incorrect to suggest they line up a buyer before initiating foreclosure.

[Robb]

67. I suggested no such thing.

Read the post again. I also know foreclosed properties sit for long times without selling.

The bank knows that, in general, there are buyers out there for foreclosed properties. This is why they foreclose.

In this discussion, for example, if society believed it was immoral to buy foreclosure property, and did not, banks would not foreclose; they would find another way to recoup their investment.

[anigbrowl]

88. More likely, banks would simply abstain from making such investments.

If foreclosure on a debt is never an option, there's no financial incentive to become involved in a contract that can't be enforced.

[virgogal]

11. Of course it isn't.

[sandnsea]

14. Better than a crappy landlord buying them

It's not like it's going to make any difference to the original owner.

[Kaleva]

15. No.

[we can do it]

16. It Helps the Neighborhood and the Buyer

what's the problem. I don't want an empty foreclosed home next door.

[stranger81]

19. I think it's definitely taking advantage of someone else's misfortune.

I don't see anyone here disagreeing with that . . . but most think it's moral nonetheless. Personally, I disagree. My parents lost their house to foreclosure a few years ago, and my husband and I would rather continue to rent than to take advantage of that kind of a situation.

Just my two cents.

[slackmaster]

29. I must step up and disagree. You don't know whether the foreclosure resulted from misfortune

Or from poor financial decisions, or from being the victim of a scam, or something else, or from a combination of factors.

My parents lost their house to foreclosure a few years ago, and my husband and I would rather continue to rent than to take advantage of that kind of a situation.

And continuing to rent would help your parents somehow?

I understand that being in the same family as the people who lost the home makes it a special situation, but in general it doesn't do the pervious owners any good to pass up what may be a good deal for you. Would your parents be proud of you for making a symbolic stand like that? I'm sure mine would not.

[stranger81]

46. The question wasn't whether my decision is financially beneficial to me,

or personally expedient for some other reason. The question was whether deciding to buy a foreclosed home is moral or not. Giving back a $20 bill you see drop out of someone's purse isn't financially beneficial to you, either, but I'd still argue it's the moral thing to do. It may also be a better deal for you to buy stolen property, but again, it's not the moral thing to do.

All I see in this thread are comments about personal financial gain, not any kind of moral calculus.

[anigbrowl]

62. That analogy doesn't hold up

it's one thing if your family or friends get foreclosed upon and you buy it - there you could be said to be trading on the fact that you have insider information about their financial problem, and are taking advantage of it. You compare this to seeing someone drop $20 and choosing whether to tell them or not.

But it's just as likely you find $20 on the sidewalk and it's if it's not obvious where it came from then there's no shame in picking it up. If you look at a house for sale and the realtor mentions it's a foreclosure, well there's no shame in going ahead and buying it if it's the house for you. You have no way of knowing whether someone ran out of money or just walked out on the debt, nor should you lose sleep over it.

[slackmaster]

68. It's morally neutral, like most other choices we make in life

:hi:

[customerserviceguy]

53. Your parents signed a piece of paper

that after all the legalese is boiled down said, "In exchange for lending us the money to buy this house, you get to take it back if we don't pay you."

For every set of people like your parents, there are many more sets of people over the years who paid fixed rates of interest on a loan, for an asset that has appreciated in value, that since about 1997 has been relatively free of capital gains taxes. Other people put the money that was lent to the banks in them, and got low rates of interest. Situations work out well more often than they work out poorly, over the long run.

It's when speculative greed causes bubbles to form and inevitably burst that people who got the timing wrong hurt. Everybody who participated on the way up did OK.

[flvegan]

20. I can see how someone, in certain sale situations might suggest that.

I don't think it is morally wrong, unless you're some shit predator taking advantage of people that may be continually be screwed by the deal after the sale.

For example, if someone is buying a bank-owned REO after the sale...nothing wrong with that. Hope you got a great deal. However, someone seeing an investor bidding on a foreclosure at the court sale, on a house that was taken from some elderly lady with a ton of equity who lost her husband last year...yeah, that's going to make you look like a douchebag.

[GoneOffShore]

Is it morally wrong to buy a repossessed car?

Same thing.

[Luciferous]

34. Good example

I had a car repossessed years ago. I hope whoever ended up buying the car enjoyed it because it was a nice car. I certainly wouldn't call them a bottom feeder. It was my fault for not making my payments, why be bitter about it?

[Iggo]

59. ...or a guitar from the pawn shop?

[ecstatic]

21. Is it morally wrong to win money in Vegas?

When so many people lose everything through gambling in Vegas? :shrug:

[Naturyl]

75. No more so than making money in the stock market.

Both are legalized gambling.

[DefenseLawyer]

24. Makes me think of Muley and the bulldozer

If the cat does smash his place today another will be there tomorrow.

[slackmaster]

26. Of course not. What a silly question. K&U.

What would you be doing by passing one up, other than possibly screwing yourself and your family out of a dream home?

Trying to make some kind of political statement?

Every foreclosure story is unique, and you as a buyer USUALLY have no way of knowing anything about the events led to the foreclosure. It's really not your problem no matter how it came to be, and the home IS going to be sold eventually to SOMEONE.

[Cant trust em]

50. What's the point of a K&U?

Why kick if you're also going to unrec?

[slackmaster]

69. I kicked because I found the topic interesting and wanted to make a comment

Rather than simply unrec'ing.

Posting any comment constitutes a kick. ;-)

[Blue_In_AK]

31. I don't think so.

I bought my home (a foreclosed duplex) in 1990 after a real estate downturn here. Ironically, I had been renting at the time, and my landlady was foreclosed on, so I HAD to move. Rentals were scarce at the time (all the foreclosed people were renting), so I was able to get into this place for a very reasonable price...the best move of my life.

[stray cat]

32. Of course not! Why should you be punished for a responsible purchase?

People have had failed loans for years as they often bought more house than they could afford. Also not purchasing a home will not give it back to those who lost it and absolutely does nothing to help the former owners anyway.

If you buy the house for a good price you may even keep the former owners from making payments on a house they no longer own because it lost value compared to their purchase price.

[stray cat]

36. Is it ok to rent an apartment if the previous person didn't pay the rent?

[Cant trust em]

38. What if they were evicted for different reasons?

Condo conversion or something like that?

Living in San Francisco I see this kind of speculative crap all the time.

[tammywammy]

40. No, and I say that as someone who did buy a foreclosure

2 and a half years ago, this house was a foreclosure that sat on the market for 6 months, before I bought it. I had nothing to do with the previous owner losing the house.

[Dreamer Tatum]

42. Hell no.

Good grief.

[QC]

44. I made an offer on a short sale today.

The seller is a realtor who tried to play flipper and found herself with no one to flip to.

If the bank accepts the offer, she will be out from under an enormous burden and the bank will be cutting its losses on a loan it should not have made to start with. I, of course, will get a bargain on a nice house.

This could work out well for all parties.

But I get the point. Sometimes I get very depressed looking around in foreclosures and finding things like family pictures still stuck to the fridge.

[Time for change]

45. No

Why would anyone unrec an honest question???

[LibertyLover]

47. Even though I lost my home to foreclosure

I don't think it's wrong for someone to buy a foreclosed home.

[liberal N proud]

49. The system that allowed the people to buy the house in the first place is immoral

The original owners were convinced they could buy much more house than they could afford. And for what?

So some fat banker could get fatter.

You are just capitalizing on the down turn. Being in the right place at the right time to take advantage.

[The Straight Story]

51. Taking advantage of the loss of others is the capitalist way (nt)

[Blue-Jay]

54. So it's better to let the place sit empty?

[Iggo]

60. Capitalizing, so to speak.

[JVS]

55. Whether you buy the house or not, the bank has already decided that the old owners are S.O.L...

depending, of course, on whether the foreclosure happened in the traditional way (think Joad family) or if the previous owners simply looked at prices nearby and decided to mail in the keys and save money by buying a new house at a lower price.

Now, since you're buying a property of a bank, ask yourself: is it wrong to take advantage of the fact that the banks are motivated sellers?

[Cant trust em]

61. I'd prefer for the banks to be motivated to renegotiate the loans with original buyers.

But I do agree that it's not immoral to buy a foreclosure.

[PVnRT]

74. I see nothing wrong with taking advantage of banks

In fact, I encourage it.

[TexasObserver]

56. No, of course not. It's moral to buy homes that have been foreclosed.

Let's start with the debtor who lost the property.

The decision by the lender to foreclose was made months earlier, and only resulted after the debtor and lender were unable to agree on any plan to get the debt paid on some basis. The debtor has already lost the home when it is offered to buyers at foreclosure, or after foreclosure.

Contrary to the supposition some have, many of these homes are not being purchased by consumers AT foreclosure, but some time after foreclosure. Lenders usually "bid in" the house at some figure they've decided is their bottom line number for this house, and buy the house at foreclosure. Then they assess its value after gaining possession of the home, and place it on the market for sale. Some time later - weeks or months or even years - a buyer comes along and offers a price to the lender.

The transaction by which the foreclosed home is sold to the new buyer is strictly between them. The new buyer is not profiting from the departed debtor, but from the lender's bad lending practices. They're the ones with the failed loan that will see part of its principal and all its remaining interest written off.

The community where the property is located is greatly enhanced. Where there was a vacant home, a family moves in and starts caring for it. This helps the value of every surrounding house, as well as the street. This helps the community that depends on people living and spending money within two miles of this house. Any time a house gets sold to a user from a foreclosure file at a lender, it's good news for all those citizens in the community, none of whom were at fault because someone's parents could no longer pay their house note.

Homes being bought means all sorts of household items being bought. For those who want to pretend "that only helps China," I would point out two things.

First, No, it doesn't. Seventy five percent or more of the cost of that consumer item goes to Americans somewhere in the distribution chain, and there's taxes on top of that which go to municipalities, counties, school districts and states.

Second, even the part that helps China helps us. They've loaned us the equivalent of two years of the federal budget deficit out of the last eight years of deficit spending under Bush, so we want them to have money to buy our debt.

[earth mom]

57. I'd bet most of the buyers are house flippers.

And yeah, I think it's wrong to feast on other peoples misery and loss. :thumbsdown:

[Naturyl]

76. Yep, many are definitely house flippers.

But of course, the American narrative says there's nothing wrong with that either, and that in fact it is admirable.

[rucky]

58. Only if you don't plan to live in it. n/t

[wickerwoman]

64. No.

My brother just bought his first house (from an elderly man going into a nursing home) after trying to buy a few short sales. He was sure he would never be able to own a home because of the crazy local housing bubble that has just kept growing since we were teenagers. (The house our parents bought for $55,000 in 1980 would have sold for $320,000 before the bubble burst.) He was patient, rented small crappy apartments for years, built up a good sized deposit and then jumped at the right time. What's immoral about that? If waiting to buy a house until the prices are low is immoral then so is all investment.

What's really immoral is charging $320,000 for a 1960s three-bedroom rambler more than an hour's commute from the city, forcing young families to live in trailer parks and consider buying old shipping containers to house themselves.

[Hippo_Tron]

65. Unless one could argue that purchasing the home gives banks an incentive to foreclose, then no

And from the looks of it, banks seem to foreclose whether or not those homes actually sell or just sit so I don't think the incentives work like that.

[Vinca]

66. If someone doesn't purchase the foreclosure it will deteriorate

and have a negative impact on the neighborhood. Not buying won't change the fact a family lost its home and few people could step in and buy the place and give it back to them.

[Naturyl]

70. This is a great question.

That it even occurs to you that it *could* possibly be wrong is an indication of a more developed conscience than I see in most. The ease and vehemence with which some are saying "of course not" is bothersome. It's a valid question coming from a sensitive conscience.

Personally, I'm somewhat conflicted on the issue. While I can't say there is anything blatantly wrong with buying a foreclosed home in a moral sense, it is nonetheless a bothersome idea. I wouldn't be comfortable with it and probably wouldn't do it. If I did, I would feel compelled to acknowledge some negative feelings about the situation.

I don't think it is immoral per se unless one celebrates the purchase and takes pleasure in the "opportunity." If ones attitude is "wow, isn't it great this person's life went into the toilet so I could get a great deal," then it would be morally bankrupt, IMO.

And yes, that attitude does occur - and isn't even very uncommon.

[PassingFair]

71. We purchased our home as a foreclosure almost 15 years ago...and didn't know it!

We have been looking for a home, on weekends, driving around
for over a year...when we spotted our house.

The price was right, and the woman selling the house told us
that she "wanted us to have it"...I was 8 months pregnant at
the time...

She was asking about 10,000 under market price, so we put in
a bid 2,000 UNDER that. Her real estate agent then told us
that the price wasn't negotiable, and that there were other
people who wanted the house.

It wasn't until we were actually CLOSING on the house, and
a guy in a black truck WAS CIRCLING the office building, WAITING
for the deal to fall through, because he had ALREADY PUT MONEY DOWN
ON THE HOUSE that we realized what a state the seller must have
been in.

She used to sit in one spot in the kitchen and chain smoke.
I still respect that space and think of her hardship often.

[Cant trust em]

79. I think that at least understanding that it comes from someone else's loss

is important. I don't think that people who want to own a home are vultures or anything of that sort, but some recognition of the how this home came on the market is important I think.

I think your point about the celebration of the deal is interesting.

[DainBramaged]

80. Is it morally wrong to prevent people on food stamps from buying soda?

[Prism]

81. I'm currently wrestling with this

At the moment, the bf and I are scoping out new places to live in the Bay Area. There are foreclosed homes for rent like crazy at prices lower than many one bedroom apartments. So, in theory, we could have a three bedroom home with a yard and driveway for less than we'd pay for a glorified closet.

It's a great opportunity for us.

But it's impossible to be unaware that this great opportunity is built on someone else's worst moment of their lives.

[Cant trust em]

82. Where are you guys looking?

I'd love to live in Berkeley, but I still think it's out of my reach.

[Prism]

84. Albany mainly

Which is right next to Berkeley. If you look up Albany/El Cerrito on the craigslist apartment search, you'll see foreclosed homes going up regularly for rent at completely ridiculous prices.

We've been looking at places for about a month now, and we've both noticed that many apartments and homes just aren't finding tenants at all.

[Cant trust em]

85. Albany is great.

The whole Albany/North Berkeley area would be my long-term goal.

Solano Avenue is great and Zachary's is right there.

[Prism]

86. As a recent Chicago transplant . . .

. . . Zachary's is much appreciated ^^ I jog up Solano every morning to the top of Indian Rock. The whole area is amazing. After only a month here, I don't think I ever want to leave, lol.

[Cant trust em]

90. Glad to hear that a real Chicagoan likes Zachary's

As a lifelong Bay Area person, I think it's good. Lou Malnati's was great when I was in Chicago last year.

[TwilightGardener]

83. Not at all. It's just a house--a THING, wood and brick and mortar.

[Waiting For Everyman]

87. I personally couldn't do it.

I couldn't be happy living in it afterwards.

Possibly one exception... If I could buy it from the owner BEFORE the foreclosure. That at least, would be helping them to lessen the loss, and it would be what they'd have a chance to agree to or not.

From the bank, no.

[MadMaddie]

89. Is it morally wrong for someone to buy a home that they can now

afford because it's in a "foreclosed" state?

That's me, I haven't bought yet but I plan to come January. The homes I am looking at are older ramblers, the home prices in the Seattle area were so high that ramblers were selling for $400,000.00 dollars those same homes are now selling in the foreclosure state at $200,000.00 - $250,000.00 that's my price range. I watch a lot of the real estate sites and look at bank owned properties and look at the sell history of the properties.

[Djinn]

91. in the 30's in Australia when the bailiffs

came to throw families out on the streets they were met by hundreds of their neighbours willing to break legs to prevent it, now they're met by drooling investor vultures. Ah progress.

[1]

92. it could be. you have to trace the proprty back to the beginning of time. did moog beat ooog?

was there any sort of that nasty business when "amerikans!" ousted native americans for land rights?

could it be possible that someone, somewhere was just a deadbeat and didn't pay their obligation?

(no. i didn't think so. no one is ever an actual deadbeat. that is just myth...)


so, yes...

you can never purchase a property in AMERIKA!

someone is always being fucked with. someone is always a victim. someone is always being oppressed.


anyone that buys a property in AMERIKA is an oppressor. probably a former slave owner. absolutely someone never to be trusted. definitely a republican.

yuck!

property owners...