Posted on 03/30/2015 9:14:54 AM PDT by Theoria
In September, Susan Rodolfi celebrated an unusual anniversary: five years of missed mortgage payments.
She is like a ghost of the housing market’s painful past, one of thousands of Americans who have skipped years of mortgage payments and are still living in their homes.
Now a legal quirk could bring a surreal ending to her foreclosure case and many others around the country: They may get to keep their homes without ever having to pay another dime.
The reason, lawyers for homeowners argue, is that the cases have dragged on too long.
There are tens of thousands of homeowners who have missed more than five years of mortgage payments, many of them clustered in states like Florida, New Jersey and New York, where lenders must get judges to sign off on foreclosures.
However, in a growing number of foreclosure cases filed when home prices collapsed during the financial crisis, lenders may never be able to seize the homes because the state statutes of limitations have been exceeded, according to interviews with housing lawyers and a review of state and federal court decisions.
“No one gets a free house,” Judge Michael B. Kaplan of the United States Bankruptcy Court in Trenton wrote in an opinion late last year, reflecting what he characterized as a longstanding “admonition” he and others made during the foreclosure crisis. But after effectively ending a New Jersey homeowner’s foreclosure case in November because the state’s six-year statute of limitations had expired, he wrote in his opinion, “With a proper measure of disquiet and chagrin, the court now must retreat from this position.”
It is difficult to know for sure how many foreclosure cases are still grinding through the court systems since the financial crisis.
(Excerpt) Read more at nytimes.com ...
Or prison gang rape of the taxpayers and the thrifty or something.
1) Foreclosing means realizing the loss on their books, immediately. This way, the fantasy market value remains in place, bolstering the bank's visual solvency until the clock actually runs out.
2) Once a clock does run out...well, the banksters have gotten pretty good at socializing their losses. If it becomes a trend, the taxpayers will ultimately end up with the tab - and the bank will not have had to spend a penny in court or to maintain a bank-owned property.
Foreclosing and repossessing costs a bank a lot of money in court fees, maintenance costs, and realized losses. Next quarter's bottom line always looks better if they do nothing.
You might want to add the role of MERS and robosinging to your summary of fault. There is plenty of fault to go around.
I know there was talk back when the mortgage crisis went down that many mortgages had been bundled and sold so many times that nobody could figure out where the actual titles to the properties were. I wonder if some of these are those cases.
These are companies that are set up in order to service mortgages. That frees up lender banks by giving them a profit on their loan, be it at a lower percentage. That allows for the lender bank to give more loans.
The largest cause of the entire mess lies with the government. They are the institution most likely to not only require the lending of money to high risk borrowers, they are also the entity that delays the process through excess litigation opprotunities and paper work.
The real winner is the attorneys. The lifeblood of the court system and government is an ever increasing supply of attorneys. They are the ones representing the banks, the borrowers and the courts.
Whenever you engage in the legal system there is a minimum of three lawyers gaining significant payment, the plaintiff attorney, the defense attorney and the arbiter or judge, also an attorney. The prime job of the judges is to make sure that the other two lawyers get paid. They are the parasites of a capitalistic society.
The real loser is the average citizen. We bear the costs in higher lending rates, taxes and inflation caused by a litigious and over regulated society.
“Banks followed the laws as written. “
No they didn’t. Otherwise they’d have a clear title.
Good point. I recall that a lot of jurisdictions refused to permit foreclosures by companies that were not on the recorded first deed of trust. The banks transfer the loans all the time without ever transferring the actual recorded first deed of trust and what happens then is you end up with a third party trying to enforce a foreclosure that they really have no right to enforce as they are not on title.
The practice also defrauds a lot of municipalities out of proper fees for recording title and since they have not been paid to record a new deed holder then why should they recognize them?
banks made money hand over fist and were engaged with regulators.
The govt didnt do anything the big banks didn’t want.
In most instances the lender bank sold the loan to a servicing company while promising to keep the hard copy files on hand, but have either misplaced, or have little inclination to produce the hard copy as they have already sold their interest in the property. Often the documents where sent but misplaced in mega warehouses under another warehouse servicing company all together.
The fact that they have clear title will be seen when the squatter finally abandons the property and it is sold at auction for tax purposes. At that time the taxes will be paid and any remaining proceeds from auction will go to the lean holder.
The squatter will never own the property they are simply getting free rent.
“...and the bank got bailed out.”
I’m guessing the gov’t is propping up the banks during these types of things continuously. About four years ago some neighbors were looking to move out of their rental home and pick up a “deal” on a foreclosed home. The prices were STILL high, and foreclosed houses on the market for months and months. They found out the gov’t was giving the banks relief for all of their foreclosed homes on their books - so the banks weren’t motivated to dump them.
Sort of like the EBT crowd. “For every kid we have that we can’t support, we make even MORE money.”
Most of them can’t prove they own the paper.
That increases the risk of issuing mortgages, so the price of mortgages will rise as a result.
It also means lenders will be more aggressive in foreclosure cases in the future to avoid having the statue of limitations run out.
As for me I say a “a pox on all houses” involved very few have even started looking a the numbers of cabals involving the banks, the builders and the appraisers, which also helped fuel this fire. Then there are all those who blame the buyers for failing to following their legal and moral responsibilities and yet have no words of condemnation for the banks and the servicers who fail to follow the real-estate laws and ended up entangling the paperwork into knotted messes which will take years to sort out and what of their legal and fiduciary responsibilities to their investors to follow the law and take care of foreclosure in a reasonable and timely manner? What of the number of State AG’s who when faced with the vast number of civil and criminal laws broken by parties involved allowed a buyout of the law? Lots of blame, but little acceptance of responsibility from anyone for their part in things. Seems now days if you are rich enough you can break any number of laws as long as you pay off someone. How far do you think a regular person would get by offing to pay the state some money if they agreed to for go investigation and prosecution?
The ones that really get me is those who say to hell with the law and get the ‘deadbeats’ no matter what even if you have to ignore the law. People have always been able to take advantage of the law and many times it takes a while to close loop holes and such, but the minute you start calling for laws to be ignored and vengeance parted out we become a lawless nation and no long Republic.
Right! And some courts are now forcing these people to prove they actually own the paper after the robo-signing scandal where way too many wrongful foreclosures took place.
My favorite story out of that was the person who won a judgment on Wells Fargo and the bank refused to pay until a judge ordered the seizure of one of their branches to settle the judgment!
Serves them right!
That is a pant load.
The banks are involved in lobbying because the government is involved in the banks. It is a viscous cycle.
Few people have any sympathy for the banks and the lenders involved. If they failed to assert their rights, that’s not my problem.
If they write off the loan as a loss, that says a lot more about them than it does about the borrower. And looking at it from their point of view, overvalued property is worth nothing.
Which is exactly how they treat underwater properties.
It’ll all get sorted out during the coming collapse - revolution.
My sister stayed in her house for 3+ years after not paying before being evicted. Her title was in the hands of 5 lenders before the last one evicted her. Some of the titles papers have her name spelled wrong. Not just printed but someone handwrote her name. The amount of the loan changed from $172,000 to $192,000 and it was plain as day that someone changed the 7 to a 9 by making a loop.
The lawyer she worked with said he could take this to court but stated that the cost would be greater then what she put in mortgage payments so she stopped paying and was able to stay in the house for 3+ years.
That s all well and good, but we as tax payers and bank customers are the ones who pay the price.
People seem to think that banks are some strange monolithic organization with malevolence and hatred in their hearts. They are simply businesses that are run by and employ people. When they get screwed over it is their investors, employees and customers who are getting screwed.
I would much rather deal with my local bank, or my credit card company than the DMV or the IRS. After all they are at least nominally customer service oriented.
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