One of the greatest achievements in life is being able to own a home. It’s an outward sign of wealth building. It’s one of the biggest financial commitments that a person can make, not necessarily one they should make.
The banking industry in America continues to survive despite all of the scandal that continues to plague them. Many folks survived the economic fiasco of 2008 because the entire economy was not affected. When only a marginal number of homeowners are affected, seemingly, the rest of the country simply falls asleep, chalking up the massive foreclosure market as a “numbers game”. Investors came out of the woodwork, thinking they were getting a great deal, when in fact, 99% of all of the foreclosure actions conducted in this country are illegal.
The reason these foreclosures are illegal can be summed up in one word: securitization.
Most people that signed on to mortgage loans between 2003 and 2008 had no idea that they were going to be victimized by an entity called Mortgage Electronic Registration Systems, Inc. and its parent, now known as MERSCORP Holdings, Inc. It has been communicated to me by numerous attorneys that the MERS® System was created specifically for the purposes of online digital transfers of promissory notes within the secondary mortgage market and that any claim by MERS that it has any part of “title” to your property is superfluous folly. MERS and its parent have continuously fought that in courts across America. It is impossible to see why a court system would give a for-profit private entity that is not in the business of lending money beneficial status. Some states have figured that flaw out, too late to avoid creating conflicting case law. If the states wanted to be smart about it, they would do what Oregon counties are doing, patterning their suits after Multnomah County’s case, which resulted in a $9-million settlement, something unheard of, unless you want to keep MERS and its hierarchy out of prison. In my book, criminal RICO is afoot here and MERS has provided the platform for that to occur in the form of servicer fraud. Servicer’s employees are allowed to robosign and backdate assignments, falsify authority and manufacture standing for lender’s who are not “the boss of the note” which is what, largely in part, makes these 99% of the foreclosures illegal.
On the backside of this equation, homeowners who are unwilling to challenge the beast are fleeing their homes in record numbers and the shadow inventory still continues to plague the real estate market.
But what of the homeowners?
As I have stated on this blog before (in previous posts), 75% of those being served with foreclosure notices vacate their properties within thirty (30) days of notice. The other 20% of those vacate their homes after being made aware an issuance of a final judgment of foreclosure or notice of a sale date. The 95% was ill prepared to retain counsel to even challenge their foreclosure and the greater majority never even showed up to court to contest their foreclosure (in mortgage states). The banks know this. It’s a numbers game. The banks are at a financial advantage because they’ve made all their money off of interest earned (as do the servicers with all of their fees added into the mix) and the banks have a legal fund to fight with. Bank of America is estimated to spend roughly $2-billion annually in legal fees, most of which goes to fighting homeowners just like you and I in court. Whether or not Bank of America can actually prove it has standing to foreclose depends on how many assignments their servicing unit manufactures, because that’s exactly what they do when there’s a default (someone stops making their mortgage payments).
Of the 5% of the remaining homeowners, 3-4% of them duke it out in court. The other 1-2% take “cash for keys” or negotiate a loan modification, albeit the party negotiating with them probably doesn’t have the right to enter into a loan modification agreement at all. I would estimate that roughly less than 1/2-percent actually succeed in getting a loan mod at all. Most of the major banks, who are monitoring and servicing their alleged secondary market REMICs, who have no skin in the game, would rather have your house than put up with giving you a loan mod.
Contrary to what the banks and the media would have you believe, only about 1% of the 95% of homeowners end up actually “homeless”. Living in your vehicle also constitutes as being “homeless”, about as much as living in a tent city, illegally living in a storage unit or under a bridge or on a sidewalk. These 1% are seen on street corners panhandling for money. Surprisingly, there are also racketeers that panhandle to make their mortgage payments (or go party on their gains, which in my book is totally dishonest). It’s hard to tell who’s who because they all dress the part and carry cardboard signs.
The other 94% are either living with family members or have become substandard renters while they attempt to regroup. If bankruptcy was utilized to “buy time”, a negative credit score of about 450 points will tank the debtor’s ability to recover for at least 3 years. My problem with helping out many of these homeowners in “short sale” position is that I am suspicious of the bank’s real interest in the property. If I look in the county land records, what am I going to find? No matter. Short sales are preludes to foreclosures. If I see a spate of short sales in any given market, foreclosures are about 90 days behind them. Remember, the bank would rather have your house. They have no skin in the game and the longer they stay “in the game”, the more potential there is to discover their misdeeds. Their mission is to cash out and this is what has made them rich.
I have been getting numerous texts and emails from folks who have told me what they have done to survive a foreclosure. Unlike me, who had a rental property I could move into when I did a strategic default on my primary residence in 2003 (and later sold it for a handsome profit, which turned into a scheme that made me mortgage free), most homeowners have no “end game”. They made no plans. Most made no plans because they live from paycheck to paycheck. I heard one investor say, “Working hard builds character.” Well, that may be true but if there’s more month at the end of the money, character has no place in contingency planning. People will do amazing things.
I beg to hear of your story on this post, as it will give inspiration to others who are faced with similar plights. Please comment.
I have also heard that people have utilized an outbuilding or barn, moved it onto a piece of vacant land (either one they owned or owner financed) and built a house out of it. It’s primitive, but at least it’s a roof over your head. So are mobile homes, if you can find them cheap enough. I lived in one for 4 years and fixed it up so it didn’t even look like a mobile home inside. I made a handsome profit selling it when I made my next move. I am one of those that is not complacent. No matter what happens, I am resolved and determined to bounce back. I paid off the mobile home in one year and invested about $4500 fixing it up over time. The owner of the land I bought was happy when I sold it because he got paid in full when he was facing a family medical crisis and needed the funds badly; so it was a “helping hand” to him. At least I had clear title.
This is a problem for many homeowners because fighting a foreclosure means proving the title is jacked up. This is no fun when you don’t know what you’re looking for. This is why many homeowners don’t do what you’re doing and subscribe to this blog and do research into chain of title. If everyone in America did the kind of research you and I do, we wouldn’t be in this mess in the first place. This country’s economy would have bounced back on its own and we wouldn’t be depending on politicians to fix it for us.
We are in an upturn real estate market (in most of America) and this begs for opportunity. I always like real estate investing because it means creating wealth through equity positioning. If you are NOT in a position to give up, it would be better to rebound into another investment property as soon as possible, even if it’s owner financed. This is why (in the book Clouded Titles) I talk about having garage sales and liquidating stuff on Craigslist and places like that, because “lightening the load” affords opportunity when downsizing. This is part of the end game plan for most folks. You may have some other ideas, which I welcome here, because I want to know what you did to survive a foreclosure. So do my other readers. Despite the setbacks you faced, try to have a happy holiday season.