Reports of Arson Escalate Alongside Foreclosures
The fire departments of Detroit and other cities have been investigating more arsons lately. Coincidence? Perhaps, or perhaps not. But the Detroit Fire Department has noted that they issued twice as many arrest warrants on arson charges in 2007 than they did in 2005. Also, since 2004, the median home price in Detroit has dropped more than 17 percent to $145,173 and foreclosures increased more than 65 percent, according to MSN Money.
“Things were going great,” Detroit Fire Capt. Steve Varnas recalled of the local economy just a few years ago. “There were fewer desperate people in 2004 and 2005.”
Motives, according to lawyer David Brisco, include anger and bitterness over losing the home and also basic financial desperation. Many arson cases involve people who were very wealthy, but perhaps are no longer able to fund that lifestyle. Brisco investigates suspicious insurance claims for companies in five states.
“These are not necessarily lower-middle-class people,” Brisco tells MSN Money. “This is all over the place…”
The Economics of Financial Arson, a data compilation by two Baylor University professors from a 30-city study from 1991-1995, shed some light on the topic:
“Economic incentives do appear to matter for arson. We conclude that arson activity increases significantly when houses are insured for larger amounts and when homeowners encounter financial distress (as reflected in a rise in the local unemployment rate).”
Despite some debate as to whether there is a link between arson and impending foreclosure, MSN Money cites some recent examples of cases with suspicious timing.
- A Woodland Park, Colo. homeowner allegedly burned his home just before foreclosure eviction occurred.
- A Houston man allegedly faked a racial hate crime as a cover for arson on his home.
- A Russellville, Ind. woman allegedly offered her neighbor $5,000 to help torch her home and cover it up as a means of cashing in on an insurance policy.
So for people considering arson, just don’t. You should certainly make sure you have adequate insurance coverage, but don’t be in a rush to cash it in. You have other options to avoid foreclosure.
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