Could There Be a Link Between Foreclosures and Arson?

This MSN article investigates whether or not there’s a link betwen foreclosures and arson. The article doesn’t come to any meaningful conclusions but it does mention some troubling cases:

  • In Woodland Park, Colo., a homeowner was accused of burning his home just before he was evicted in a foreclosure action.
  • In Houston, a man was charged with faking a racial hate crime to cover arson at his home.
  • In Russellville, Ind., a woman was accused of trying to cash in on an insurance policy by offering her neighbor $5,000 to help torch her home and cover up the crime.
  • Moral issues aside, unless a person wants a prison roof over their head, they would have to be incredibly stupid to set fire to their house. It wouldn’t take a genius to be able to establish a connection between a distressed homeowner and a fire.

    Instead of setting fire to the place, consider the 9 options that Liz Pulliam Weston lays out in a recent article. Although foreclosure isn’t a very nice option, it’s not the end of the world.

    4 thoughts on “Could There Be a Link Between Foreclosures and Arson?”

    1. Sure its not moral, but I see the temptation. I actually talked to my homeowners insurance company about this. My home is valued at about $180k but they made me get insurance for $220k. I could easily get $40k for the land. So, had I been close to foreclosure, torching the place would be a good investment. Say, I have no equity ($180k mortgage balance). I burn the joint, and get $220k. I pay off the morgage and sell the land and now have a nice $80k to put toward a new home.

      Another thing to think of. When you have a partial loss, they pay the ammount it takes to repair. But a total loss pays the total coverred ammount. So I asked my agent. “If my house is burning down and the damage could be pretty bad, I would benefit myself by delaying calling 911 to ensure it would be a total loss.” The agent laughed and said “I guess you would.”

    2. On behalf of all property-casualty underwriters in the USA: Duh!

      Arson is one of the reasons insurers went to credit rating on personal lines. People in serious financial positions are more likely to torch a property than someone more financially stable. If 1 out of 1,000 persons torch a house, it will skew the profitability of a entire rating territory. I’d hate to see the homeowner rates in Detroit MI.

    3. As a CO native my first thought while reading this was “of course they did…that’s just Woodland Park for you…”

      And then my second thought is since when did this whole crisis have anything to do with morals anyway? After watching that 60-minutes piece and listening to that couple talk about how they wouldn’t pay their mortgage, I’m pretty sure that morals took a back seat in a lot of this!

    4. It would be pointless in expensive areas as land is often more than half the value and it doesn’t burn, nor do insurers insure it.

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