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She used a lawyer to finesse the law instead of making good faith payments ($1300 mortgage vs. $500/month for the lawyer). It doesn’t make her right. She stole the house.

I read the article and I think she was capricious and disingenuous in her representation to the bank about any “deal” and she scammed them.

Regardless, now the banks won’t have to pay the property taxes (back taxes included) and insurance and this b!tch will lose the house.

Chances are they paid the taxes (they're good about that). She will, probably, receive a 1099-C for the unpaid principal, in which case she will have to pay Federal and state income taxes, although I wonder if this wouldn't count as a capital gain.

I don't see any problem here insofar as we shouldn't have one law for wealthy companies and another for everyone else: the mortgage company screwed the legal pooch, so now they have to pay the consequences like everyone else.

In addition, it's likely the bank was paid off by PMI a long time ago-- its probably the insurer and the servicing company left holding the bag.