(OP-ED) — The author postulates the following for things you might want to consider when all else fails. None of this commentary should be taken as legal or financial advice. If you’re a homeowner who is hurting financially, you should at least consider these options before the ship sinks.
IN THE WORLD OF FORECLOSURE
Welcome to my world of the last 12+ years. I use the “+” sign because my foreclosure scenario started back in 2003, which, upon reflection, caused me to start researching into what turned into the book Clouded Titles. That was back in October of 2008, when I began compiling all of my research into the cause and effects of the 2008 financial collapse and by December of 2010, the book was released in its 254-page format. It’s now 432 pages.
I write this post in earnest because this is the other way of saying, “What’s your end game?”
YOUR END GAME AND THE PRACTICE OF LAW
Most attorneys dealing in foreclosure defense will ask you that very question when the time comes for you to deal with someone claiming you’re in default and they want their house back. They want to know how long they can count on you to be their client.
Most attorneys won’t take your case unless you can actually tell them a valid reason WHY they should take your case. If you don’t have one, the honest attorneys will move on. Most attorneys also want to know if you intend on fighting until you can’t fight any longer. Some attorneys don’t care how long you fight, they’ll just suck your bank account dry anyway.
A lot of your response depends on whether it’s fueled with emotion, entitlement or serious legal logic. If there is a forensic issue with your property, such as dealing with failed mortgage loan servicer accounting issues, that is different than attacking the foreclosure mill law firm based on other more complex grounds, like tortfeasor claims. Sometimes you can actually settle your differences with the other side’s attorneys. More often than not however, the servicer wants your house and will stop at nothing to get it, including dummy up phony land record documents.
At the end of 2020, a lot of my investor buddies think the banks will be doing a lot of loan modifications with those who, even though they got behind in their payments, can start paying again. But there’s still that handful of tens of thousands that are the exception to the idea and won’t qualify. These folks still may have “exit opportunities”. They just haven’t realized it yet.
A lot of exit strategies are based on lack of finances altogether. The stimulus checks could never be enough. Thus, you must first sit down and have your “Come to Jesus” meeting with yourself and your spouse and family, if that’s applicable. You cannot … and should not … hide the fact that a legal action has been commenced against you, hoping it will go away because it won’t.
I talk about various “exit strategies” in my book Clouded Titles for a reason. Back in 2003, I did what’s known as a “strategic default”. I walked away from a high-priced, 80/20 predatory mortgage loan, knowing I had a better deal elsewhere. But, at least I had a better deal elsewhere. Most of those reading this post will not and/or do not. My “end game” was to walk away. No cash for keys. Nada. I was already upside down from the word “go”, so leaving was a no brainer. Unless I did something drastically sensible, I would continue to throw good money after bad. I moved into one of my rental properties and sent Ocwen the keys. Not that many are fortunate enough to have that kind of “back door” but it doesn’t mean there couldn’t be one.
The way I look at it, if you have no equity in the house to begin with, whatever money you threw at the property initially amounts to nothing more than short-term rent payments. That money is gone. What you do with the rest of your funds means everything at this point.
HISTORY DOES REPEAT ITSELF
Because of the fact history repeats itself and the Glass-Steagall Act has still not been reinstated, the banks are still playing in the securities business and REMIC trusts abound. As long as there is an “arm’s length” issue that keeps the borrowers away from the investors of these trusts, courts will continue to kick people to the curb at the whims of the REMICs’ trustees.
Because of the Spokeo v. Robins case, injury in fact has to be proven. This is where the Exit Strategy is most important because attorneys don’t recognize that the investors aren’t the ones that are being harmed, at least not always. Yes, there have been lawsuits by investors against these REMIC pools because there were discrepancies in the quality of the loans they “bought into”. I don’t personally feel the least bit sorry for any of the greedy bastards. They deserved what they got. They saw a way to piggyback on top of the banking industry’s profits. But were they injured? No one is asking them or their trustee to prove it. Why not?
Think about that. If the REMIC’s trustee or some third-party junk debt pool is dragging you into a foreclosure process, it’s because the trustee (who claims to represent the certificate holders of a certain trust) says you’re in default and the certificate holders were harmed, when in fact, just the opposite is true. You may not have made your payments, but the servicer of the REMIC trust was required to make them for you anyway, regardless of whether you paid or not. So, it’s really not the certificate holders that were harmed, it was the servicer (or sub-servicer) who had to shell out millions of dollars out of its coffers to cover the advances due on the Distribution Date every month. THAT’S who is coming after the homeowners in foreclosure, not the “lender” REMIC. The REMIC is an entity that is tax-exempt as a pass-through trust. Nothing more. It made misrepresentations to the certificate holders about what they were investing in. That’s not our problem. We have to show our payments were paid whether we’re the ones who paid them or not. But what does the servicer do? Its attorneys bring in pay statements, showing the judge when was the last time you paid on your mortgage … then they call you a deadbeat … and just like that, you lose your home.
What’s wrong with that picture? Sometimes, the servicer doesn’t even bring in pay statements and the court still gives away your home … to an entity that actually may not deserve it.
Your time to discover that there was an issue with your mortgage loan was the first time you got notice that your servicer changed and another servicer started demanding money from you. But instead of researching the land records and looking for bogus assignments to do a C & E on, most homeowners were too self-absorbed to realize what was going on until it was too late to do anything about it.
THE GSE’S ARE NO DIFFERENT … THEY JUST HIDE IT BETTER!
If you go to irs.gov and type Publication 938 for any given year in the search tool and look at the documents that come up, you’d be amazed to see how many Fannie Mae, Freddie Mac and Ginnie Mae REMIC trusts there are in existence. These are the REMIC trust that each of these government-sponsored entities (GSE’s) are the administrators for. They are like a trustee except when they come into court, they come in on their own behalf … most of the time. In non-judicial settings, it’s always the servicers that come knocking, preceded by suspect documents being recorded in the land records. When you’ve seen as much of this bullshit as I have, all of this becomes “old hat”.
I might as well be the judge that says, “What else ya got?” It’s the same shit. Just a different day. And no one is the wiser when the servicer transfers ownership of your property to the GSE when it’s all done because you’re too busy trying to figure out your exit strategy, after it’s too late and you’re treading water.
WHY DO WE CAPITULATE TO THESE BANKS?
There’s just something inside each one of us that twists our stomach in knots when we finally realize what’s happened. We can no longer be in denial. Some entity out there (run by a bunch of misguided minions who think everything they’re doing is legal) is coming to take our most precious commodity away from us … shelter.
Remember when I previously stated that the three most precious commodities in America today are food, water and shelter. Anyone who deals in these businesses will continue to survive because they have access to those three commodities. There is a fourth commodity that shouldn’t be overlooked: transportation. A lot of people have depended on their cars for a place to live because there was nowhere else to go. Sadly, I had to live in my car for a month (back in the 70’s). It wasn’t any fun. Going to gas station rest rooms to clean up was no fun either.
Those who have no “end game” when the time comes will be scrambling at the last minute, driven by panic and not common sense, to play in a condition I have previously described as the Titanic Syndrome. In other words, it’s every man for himself … man the lifeboats. Wait! There aren’t enough lifeboats and the ship has just hit an iceberg and is listing. The band strikes up with Nearer My God To Thee as passengers fight each other for space. Those who didn’t make the lifeboats get sucked down into the ice cold depths of hell when the ship finally turns on its end and sinks to the bottom of the Atlantic Ocean. Those who remain are floating on the surface are left clinging onto pieces of driftwood, which is what My Heart Will Go On-type movies are made of. And doesn’t all of this just tug at your emotions?
Instead of doing something productive to get away from this situation, we keep clinging onto what’s left of our scenario, when we should have damned well realized that the mortgage loans we took out are going to be the death of our equity in life. We were too slow to react, which is why I write this column. Yes, we need shelter; however, HOW and WHERE we get it should have been more thoughtfully researched … and weren’t … because, again, most of us got caught up in the emotion of buying more home than we could afford. As a result, we’d rather be all stressed out, suffer from heart attacks, family discord, suicide, murder-suicide … all thanks to a situation that was created by the banks and made all too easy for folks to access. Every day you do nothing means your equity (that which you still have in yourself, I like to think of it as sweat equity) is going to waste.
The first time we capitulated to the banks is when we took out a securitized mortgage loan that was registered in the MERS® System. The second time we capitulated to the banks is when 97%+ of us bugged out when we got a foreclosure notice. We did all of this out of ignorance and false hope because we were promised things that did not come true for our futures. Putting false hope that a bank is going to come and rescue you or even cares about you is your first mistake, which is why you have to strategize about your own realistic future and make a decisive move towards that end.
SINCE I GOT INTO BUILDING HOUSES … MY THOUGHT PROCESS HAS BEEN ALTERED SOMEWHAT
Tiny homes are nothing new; however, the idea that you could scale down into one and tell the bank to piss off seems to ring true with a lot of folks these days. This is why banks don’t want jury trials in foreclosure cases because chances are, there are a lot of folks that hate banks as much as the foreclosure-affected person does. We all have our reasons for doing what we do. However, imagine being able to use your resources to acquire a small plot of land somewhere and put a temporary shelter on it that you could live in while you build a bigger home from the ground up and you could use that shelter for an office or guest cottage later. How does that sound? What if you could mount that cottage onto a trailer and tow it around with you and go mobile? A lot of people are doing that these days, except they’re buying big, bulky RV’s that suck gas and are in no way energy efficient, are cumbersome to navigate and are a waste of money anyway (I’ve had RV dealers tell me that personally).
To me, tiny homes are just a way of temporarily downsizing until the moment comes where you can seize a better opportunity for yourself.
IT’S JUST STUFF …
Another thing folks have a problem with is letting go of material possessions they don’t need. If you’re a hoarder, your scenario becomes more than a mental challenge. You’re in a world of your own and anything that disturbs it will cause serious health complications.
Downsizing is one thing if you have time to part with your property before the bank does, especially if there’s that much equity to be had. But could you imagine being able to become self-employed and work out of your own portable home? You could rent a space in an RV park and take on work locally for that matter. There are a lot of ways to turn lemons into lemonade if you just put your mind to it. Since food is one of the key ingredients in the game, your plot of land could serve as a garden and supply you with an income doing truck farming, an all cash business.
Or if you have a professional service you could offer where you don’t spend a lot of time in any one area (like handyman, painting or other simple construction work like day laboring, it would be nothing to be able to pick up cash to stay afloat while YOU decide HOW you want to live … and not the bank or its servicer deciding HOW YOU SHOULD LIVE (broke and homeless in a tent city somewhere). To the banks, it’s a numbers game. You’re just a number. Don’t you just hate that thought?
I like what I’m building now, because the house is made out of steel SIPS panels. The walls are 4″ thick with EPS foam insulation and have 6″ in the roof. The panels are made from 26-gauge Galvalume® steel, sandwiched around the insulation to provide airtight and watertight, non-toxic living! These homes are Category 5 hurricane resistant and have no termites because there’s nothing to feed off of within the entire structure itself. The structure will also save 50-60% on energy bills, which means nothing if you’re renting an RV space but everything if you’re on the grid in a fixed location. Yet, you can take this same concept and for way less money, construct a portable home that is energy efficient in almost any climate.
The alternate exit strategy here would be to downsize to something smaller more manageable or even mortgage free (having a free small home to live in, even if temporary, is better than having to pay rent), despite having to make a small land payment every month. At least, that’s manageable.
I did that very thing in 2007. Back in 2003, I acquired a 12-acre parcel of land, which I later sold at a handsome profit. By the time 2007 arrived, I had acquired a used, single-wide mobile home and fixed it up to the point you couldn’t even tell it was a mobile home when you set foot inside. I had a land payment of $222 a month for 10 years for almost an acre of land. I lived in that mobile home for 4 years and lived within my means while I continued to help homeowners fight foreclosure. I made use of the barter network too. I use this example to illustrate what a little imagination and creative financing can do to make you mortgage free. As part of the land sale in 2007, I had the buyer pay off all my existing debt and move the mobile home from the 12 acres to the 2/3rd’s acre and connect the septic and utilities and make the land downpayment. What the buyer couldn’t pay for in cash, I had him pay off using his credit cards and sweat equity on trade! How’s THAT for creative financing? There are ways to do a lateral move that will cost you way less money if you’ll just strategize HOW you’ll get there, HOW LONG you’ll stay in that situation and HOW you’ll survive while you’re in that situation. I made it work, so can you.
There are places where land is cheaper to acquire and many times, owners will finance it if you have any kind of down payment. You might have to relocate to a different part of America but if you’re in a situation where there’s no income in one given area doesn’t mean there won’t be in another. You have to do your due diligence. Maybe the market you’re living in has outlived YOUR usefulness and it’s time to seriously seek out greener pastures.
BEING NOMADIC DOESN’T MEAN YOU’RE A GYPSY
There’s other interesting ideas about being nomadic:
- One could go “off grid”, so to speak, because the utilities used to power a portable home are rented and not in your name (for cash);
- One could remove the SIM card and battery from a cell phone making it difficult for one’s movements to be tracked or contact traced (or get disposable burner phones) and only return calls from a central number, like that of an answering service;
- If a given state allows a property to be placed in a land trust, putting the property in a trust name that can’t be tracked to an individual personally serves as an asset shield (vehicles can be put into trusts too);
- One could easily turn a portable home into a Faraday cage with very little effort, especially if it’s built out of steel SIPS panels;
- There are ways to disable a vehicle’s GPS system so the vehicle can’t be tracked (if it is equipped with such);
- The nomad is mobile and can navigate into areas under quarantine for any reason without too much difficulty and still conduct business;
- Since the nomad would travel with the home, it’s always close by and easier to monitor no matter where the location;
- There’s nothing stopping one from taking “extended vacations” when not tied down to a mortgage loan;
- The vehicle and the home it’s tied to is 100% owned and not mortgaged; and
- The idea of being nomadic is that life is too short and should be lived to the fullest when not being encumbered by the problems of the world.
It’s really hard for most people to come to grips with the fact that everything in life is temporary and that we only have it for a short while. The thing is … one of the oldest principles my dad taught me was to pay for what you want with cash and not use credit. Credit could become the devil’s playground if not used wisely.
While this may seem extreme to some, I’ve known folks who have made a living working flea markets all over the country and have managed just fine. They’ve figured out a way to sell collectibles or some other disposable product and make a living out of it. Many set up accounts on eBay and you’d be surprised how many single moms actually go to the garage sales and flea markets, buy a lot of items in bulk and sell them online at a huge profit. It’s a great way to navigate and make an income during a lockdown. People get frustrated when they’re cooped up, so they go online and shop, many times buying stuff they don’t need. Conversely, most Americans are so frustrated and upset because of the political climate that surrounds them they miss opportunities that are right in front of them because they worry about things that are beyond their control and it consumes them.
The one thing about being nomadic, you only need internet access to run an eBay account. If anything, I might add that there are mechanisms the government can use to track a person’s income, especially if they had an eBay account. But no one said someone couldn’t run it as a home-based business and take advantages of all that Uncle Sam’s tax deductions have to offer. Ponder that for a minute. I know a guy that worked out of a satellite postal store for years, re-established credit in the name of his business and paid no income tax because he didn’t make the minimum required to even file a tax return. But this is why “the system” keeps toying with the idea of a cashless society, so it can track every single movement and control the individual. Doesn’t that kind of sound like Communism to you?
And just look what’s going on in Russia today. The country has a huge underground economy and a lot of organized crime that has taken over government. And the sheeple here do not realize what they’re in for. Concern for your safety should also drive your thought process when it comes to the “end game” as to where to relocate to start over.
The beauty of an exit strategy is … you have the opportunity to reinvent yourself.