May292015

Florida attorney scores free houses for mortgage deadbeats

As attorneys prevail with their statutory claims, tens of thousands of delinquent mortgage squatters will be awarded free housing.

houses_for_everyoneWouldn’t it be great if you could stop paying your rent or your mortgage and continue to live in your property with no further payments? If I were given the choice between getting a house for nothing or putting a third of my income toward housing, I would probably take the free house. Wouldn’t you?

In 2008 many people faced this choice. The banks were so backlogged with foreclosures they couldn’t process them fast enough, and with prices crashing, banks lost their desire to process foreclosures as well. The result was a large number of people who strategically defaulted and lived payment-free; some still live this way.

I advised people to strategically default for many reasons. First, it made no sense to pay far more than rent to stay in a property with little or no hope of equity in the future. Even with the recent reflation rally, millions of loanowners are still underwater. Second, the shortest path to equity was to strategically default, repair credit scores, and save for a down payment to become a boomerang buyer. As it turned out, those that strategically defaulted early on made the best choice.

Even though I advised many to strategically default, there was always the assumption that eventually lenders would force out all the delinquent mortgage squatters. Nobody who advised others to strategically default ever believed those people would obtain free housessave_our_squat — short-term free housing, yes, but even the strategic defaulters believed they would eventually be forced out.

Not any longer.

Strategic default and the gift of free housing has become a dependency for many. They adjusted their lifestyle to accommodate free housing, so now they consider this an entitlement, granted to them by the evil banks who unwittingly bought them free houses. Attorneys joined with delinquent mortgage squatters to try to extend their free housing benefit — forever. Thus we have the unjust enrichment of delinquent mortgage squatters.

People turning foreclosures into free homes

May 11, 2015HELOC_Squatter

ORANGE COUNTY, Fla. — Some local homeowners who haven’t made a mortgage payment in years are finding a way to keep their homes for free.

9 Investigates discovered how some people are taking advantage of Florida’s statute of limitations on foreclosures. And Channel 9 anchor Vanessa Welch found out how it’s allowing some families to go from foreclosure to a free home in just five years.

She talked to Thomas Adams, a man living in a Maitland home with a tennis court and pool. Adams has not paid his mortgage in more than seven years.
Adams owed the bank more than $140,000, but now lives mortgage free and won’t ever pay another dime.

It was only right,” Adams told Welch. “It was justice quite frankly

Right? Justice? Where is the justice for those who borrowed $140,000 and paid it back? Where is the justice for those who didn’t overextend themselves and squat for 7 years?

Since when is theft right and just?

Back in 2008 strategic default and squatting was a way to make the banks feel pain for the circumstances they put people in when they inflated the housing bubble. Banks deserved to lose large sums for their foolish behavior, but that doesn’t mean that delinquent mortgage squatters deserve to benefit either. They borrowed too much money; they failed to make their payments: both parities deserve to feel pain.

While it gives me a warm and fuzzy feeling to know the banks feel pain, allowing delinquent mortgage squatters to obtain free housing is not right. Is delinquent mortgage squatting a behavior society should encourage by rewarding them with free houses?MERS_monkeys

The initial lender, Federal Home Loan Mortgage filed a foreclosure on Adams’ home back in 2008. Later, the loan was transferred to  Nationstar Mortgage.

“They sold my loan so many times no one knew who had the paperwork,” Adams said.

Bullshit. Someone knew exactly who owned this loan. MERS has been criticized by many, but it’s withstood every legal challenge it’s faced.

Adams’ attorney, Charles Franklin, with the Freedom Law Firm, succeeded in getting the case dismissed last year. Franklin said, “It would most likely result in a free house.

Franklin believes banks have five years to file a foreclosure after an owner defaults and the lender demands the entire balance be paid.

Because Adams’ case was dismissed after that window, Franklin argues the lender cannot foreclose again.

However, lenders, including large national banks, say they have much more time to file, arguing the five year clock re-sets every time a homeowner misses a monthly payment.

squatter_scourgeI’m with the lender on this one. The borrower is delinquent with each missed payment, not merely the first one.

But Franklin insists that interpretation of the law is illogical.

“They could just keep going on and the case would never end,” Franklin said,

No, the case would end five-years after the foreclosure because once the foreclosure is finalized, the obligation to make payments under the Promissory Note ends. Five years after the end of the payment obligation the statute of limitations would prevent the lender from taking further action.

The issue is now before the Florida Supreme Court, which is scheduled to hear oral arguments on the statute of limitations involving foreclosures in October.

No one knows for sure how many foreclosed homeowners might be able to get free homes due to the statute of limitations in Florida. …

“I think there will be an absolute floodgate of people who will be able to get their homes for free,” he told Welch.

mortgage_squatterOur real estate finance system functions because lenders believe they will get their money back either through repayment or foreclosure if the borrower becomes delinquent. If lenders didn’t have this assurance, they simply wouldn’t loan the money.

While some argue it’s unfair that some are getting homes for free without meeting the obligations of their mortgages, others, including some of Adams’ neighbors, have little sympathy for the banks.

“If they didn’t exercise their rights when they should have, it’s their tough luck. Good for my neighbor,” said Larry Furlong, who lives across the street from Adams.

While this makes for an interesting anecdote, I doubt this opinion is representative of the feelings of his neighbors who paid their mortgages over the last seven years and will continue to pay their mortgages for many more years until they don’t owe the bank any money.danielle-earlsmaller

Adams, meanwhile, says his heart is failing and he can no longer work. He claims responsibility for falling behind on his payments, but blames the bank for not honoring on his hardship request.

He said he doesn’t feel the least bit guilty now.

If given enough time, anyone can find rationalizations for their bad behavior.

“I think it is what you would call poetic justice,” Adams told Welch.

Adams still has to pay taxes and insurance, but it’s much cheaper than his previous payment of $1,400 a month.

The bank can also keep a lien on his property until the home is sold.

The bank will have the last laugh. While this delinquent mortgage squatter may be able to live out his life without paying for his home, he will never be able to borrow against it, and if he tries to sell, the bank will demand repayment in full, and they will recover the full resale price of the home as the late fees and interest will undoubtedly grow faster than the resale value of the property.

I agree with Mr. Adams: “I think it is what you would call poetic justice.”

Susan-Rodolfi


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