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 ...
The banks created money out of thin air for homebuyers (frational reserve)
Albuquerque. One thing which I imagine has some baring is that this subdivision was almost exclusively handled by Countrywide.
I think most of the problem lies with mortgage servicing companies. They buy thousands and thousands of mortgages in blocks from lender banks. Those banks either don’t or can’t find the hard copy documents in order to turn them over to the new owner, or the new owner has them stored in offsite mega warehouses too mismanaged to find anything. Don’t forget. Everything is digitized, UNTIL you get a court filing. Then a hard copy MUST be presented.
When the bubble bust, many people who could afford to pay, decided not to pay. This exacerbated the problem that was already bad due to the poor quality loans, real distressed buyers and the outright fraudulent loans. All those loans where packaged as grade A+ paper and sold to unsuspecting service providers.
The courts where backed up and foreclosures have continued at close to record levels for years. People seem to think that the worst year for foreclosures was 2007 or 2008. It was actually 2011 with over 3.5 million foreclosures filed. Prior to 2007, half a million was an average amount of foreclosures. Today there are still around 1,000,000 per year. More than 70% higher than historic averages.
http://www.statisticbrain.com/home-foreclosure-statistics/
Lawyers and their clients take advantage of this fact and drag their feet knowing that every month they can delay is one more month of free living, often at hundreds or even thousands of dollars a month, and one more month of billable hours for the lawyer.
The woman in question was to pay $93,000 in mortgage payments over the past six years. However she only paid $36,000 in legal fees. That has saved her at least $60,000 in six years.
How much of that $10,000 a year has she been able to bank or spend on her boating habit, eating out and dog?
Everybody seems to think that the banks are the ones getting screwed. In almost all instances the banks long ago sold any interest in the loans to third party mortgage servicing companies. These companies relied on the banks integrity and lending practices in their decisions to buy the loans.
Besides, even if it was the lending banks getting screwed. We as their customers pay for it in additional fees and higher lending rates when we chose to do business on credit.
The people who refuse to pay their mortgages and then simply squat in the home are the ones costing you and me more money. The banks will get their money one way or the other.
The mortgage holder shouldn’t be artificially propped up to eliminate their risk. If they can’t be bothered to ensure the title to the property is properly handled then the property should be removed as support for the loan.
from the Article: “Still, the lender has some recourse: It can keep a lien on the house that must be paid off if the property is ever sold.”
so although the deadbeat may be able to keep living there or even rent out the property, they will never be able to sell without paying up.
Each missed monthly payment could be a new cause of action. It could be asserted that until the statute of limitations ran out on the last payment could the debtor claim ownership.
Why? Everybody is happy! The voter got a free house and the bank got bailed out. It’s like consensual sodomy!
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.
The banks only have to pay the States AG a small percentage of the money involve and he will recuse them from having to comply with any and all of his States Real-estate laws and any and all penalties civil or criminal. Sames fair.
Kind you scratch my ###### and I scratch yours?? ;-)
I almost feel like we can legitimately claim to be seers!
It was still stealing. She can equivocate and stand on “the law” all she wants, but it is getting something you did not earn and did not intend to earn.
BTW, PMI is paid by the homeowner to protect the lender. She didn’t make any mortgage payments, thus no PMI.
Regardless, the IRS will get her, too. You’re right. It is a capital gain and she can’t claim an exemption unless she sells the house, and I doubt anyone would see that place having a ‘clear title’.
If a bank’s property rights can be invalidated, so can yours. At best, the losses will be passed along to other customers. Enjoy your increased fees and interest rates.
The real irony is the bank would have refused that same offer from the original owners.
It’s that, and stalling helps keep some artificial valuation in the marketplace. Stalling foreclosure also keeps the borrowers on tap for taxes and HOA fees if there’s no escrow account.
Who caused this mess?
Was it the banks?
Banks followed the laws as written. They where told to lower lending standards on mortgage loans or else.
What do you think Barack Obama did as a ‘Community Organizer’? He harassed and sued banks into lending to poor quality customers. Often through government regulations and laws.
Was it the customers?
They often took loans out that they knew would be difficult or even impossible to pay back. Many wanted to pump and dump for big profits. When things got tight, did they do everything possible to pay their loans? Did they contact their lenders to try to come to terms, or did they simply stop paying?
Very few banks will refuse to work with a customer that comes to them first. They don’t want the home. They want the mortgage payments.
Was it the Government?
After all they are responsible for the actual laws governing the lending industry. Like Insurance, another industry they constantly rail against, banks and financial institutions are among the most highly regulated industries in the country. That is why a lending document is dozens of pages long. Every one of those regulations add to the burden on the banks and increase the bottom line cost to the customer.
They are also the largest individual rent payer in the World paying billions of dollars in rent for people through fair housing vouchers which are anything but fair!
All these housing vouchers drive up the fair market values of both rental units and real estate to levels that are out of the reach of many working individuals.
This leads to the perverse scene of welfare recipients living in working and middle class homes next to home owners who are paying hundreds or thousands of dollars a month in payments to live like their neighbor who is paying nothing.
A better recepie for resentment could never be found.
More likely it is a combination of all these that caused this mess.
Now the only people really paying are those that are honest enough to pay their obligations.
There is still allot of foreclosures going on out there. Almost 100% more than the historical norms.
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