Robo-signing scandal creates more false hopes among squatters

Some loan owners delayed their mortgage default on the false hope that the robo-signing scandal might net them a free house.

Irvine Home Address … 92 AGOSTINO Irvine, CA 92614

Resale Home Price …… $449,900

I make a rich woman beg, I'll make a good woman steal

I'll make an old woman blush, and make a young girl squeal

I wanna be yours pretty baby, yours and yours alone

I'm here to tell ya honey, that I'm bad to the bone




Bad to the bone

George Thorogood — Bad To The Bone

Denial and the desire to be rescued runs deep in our culture. From our religious traditions to popular television, everyone has a sob story and some reason why they need to be relieved of the responsibility for their actions. Back in March of 2008, I wrote about Bailouts and False Hopes:

One of the more interesting phenomenon observed during the bubble was the perpetuation of denial with rumors of homeowner bailouts. Many homeowners held out hope that if they could just keep current on their mortgage long enough, the government would come to their rescue in the form of a mandated bailout program. Part of this fantasy was not just that people could keep their homes, but that they could keep living their lifestyle as they did during the bubble. What few seemed to realize was any government bailout program would be designed to benefit the lenders by keeping borrowers in a perpetual state of indentured servitude. With all their money going toward debt service payments, little was going to be left over to live a life.

All of these plans had benefits and drawbacks. One of the first problems was to clearly define who should be “bailed out.” The thought of bailing out speculators was not palatable to anyone except perhaps the speculators themselves, but with regular families behaving like speculators, separating the wheat from the chaff was not an easy task. If a family exaggerated their income to obtain more house than they could afford in hopes of capturing appreciation, did they deserve a bailout? The credit crisis that popped the Great Housing Bubble was one of solvency, and there was no way to effectively restructure payments when a borrower could not afford to pay the interest on the debt, and this was a very common circumstance. None of the bailout programs did much for those with stated-income (liar) loans, negative amortization loans, and others who are unable to make the payments, and since this was a significant portion of the housing inventory, none of these plans had any real hope of stopping the fall of prices in the housing market.

It has been nearly three years since I wrote that, and every few months, there is another loan modification program, proposed bailout, or some other news issue that gives debtors false hope. The latest has been the robo-signer controversy.

So far, politicians on the Left have used this issue to try to pander for votes with populist appeals of innocent homeowner versus the evil banking machine. The banks were happy to go along if it made a few loan owners make a few more payments in the false hope that may may get their debts forgiven. And as we will see today, attorneys have already found a way to exploit the issue to make a few dollars on the false hope of the masses.

Fannie and Freddie give green light to resume sales of foreclosures

by CHRISTINE RICCIARDI — Monday, November 29th, 2010, 1:35 pm

Fannie Mae and Freddie Mac gave real estate agents the green light to resume selling foreclosed homes, after suspending the process as the robo-signing debacle unfolded the past two months.

Freddie told agents in a memo last week to "resume all normal sales activity," as the government-sponsored enterprise will "resume marketing, sales and disposing of assets previously placed 'on hold.'"

Fannie Mae told its real estate agents "to proceed with scheduling and holding the closings" of sales of homes with mortgages owned or backed by the GSE.

The green light is unambiguous. No special conditions or circumstances allowing delay. Foreclose as quickly as possible.

The mortgage-finance giants initially enacted a moratorium on sales of foreclosed properties because servicers were allegedly signing affidavits either without prior knowledge of the case or without a notary present — a phenomenon that became known as robo-signing.

Many other lenders, including Ally Financial, JPMorgan Chase and Bank of America, issued foreclosure moratoriums that have since been lifted.

Bank of America started refiling new affidavits Oct. 25. A spokesperson for JPMorgan Chase said they have not started refiling and will do so state-by-state. The process should take three to four months.

Ally Financial said it will move forward with a foreclosure in the 23 judicial states when it has reviewed and remediated the affidavit. Cook County, Ill., restarted foreclosure evictions two weeks ago.

Both Fannie Mae and Freddie Mac recently pulled their existing foreclosures cases from one Florida-based firm at the center of the robo-signing scandal, The Law Offices of David J. Stern.

David Stern already made a fortune, and the pullout by the GSEs is more for press relations than anything else. As scandalous details emerge, this issue will re-appear now and again over the next few months, but with exception of the articles promising more false hope, this issue is behind us.

Robo-signing scandal overrated?

By: Liz Farmer 12/09/10 12:05 PM

A foreclosures expert says that the national investigation into the robo-signing scandal, in which lenders blazed through thousands of foreclosure filings without reading them, is so far not yielding any results that would give people their homes back.

The definition of false hope: people are not getting their houses back, nor are they getting any principal reductions.

Rick Sharga, CEO of RealtyTrac, a foreclosure tracking firm, said the investigation by state attorneys general will likely result in fines against mortgage servicers and even some criminal prosecution. But the bottom line for homeowners who have lost their homes is the same.

"We've seen very little fallout in the way of forseclosures … being overturned," Sharga said. "There's not a single case where a home that has already sold has been overturned."

The 50 states and the District are participating in the investigation into illegally filed foreclosures.

Reporters have been scouring the nation looking for the victims of robo-signer, and so far, nothing. Sometimes people forget that the reason robo-signer is after these debtors is because the debtors are not making payments on the loan for the money they used to buy the house they are squatting in. Borrowers used the bank's money, and now that they can't pay the bank back, the bank wants to take the house purchased with the bank's money. That's how the system works.

Money Talks: Foreclosure Rip-Off

by Stacy Johnson — Posted: 12.10.2010 at 7:35 AM

Some look at a foreclosure and all they see is someone who borrowed money they didn't repay.

The homeowner is the bad guy, the bank is the victim.

It's more nuanced than that black-and-white view. Clearly, a foreclosure is a process against a borrower who did not repay the money they borrowed. If lenders didn't have ability to get their money back, there would be no lending. Whether these people are good or bad is beside the point. The borrower needs to either repay the money or give up the house pledged as security to the loan.

A foreclosure defense lawyer, however, sees it differently.

It isn't the way most people think it is in terms of "Oh, these people haven't paid their mortgage."

These people were sucked into a horrible deals buying ARMs that they never should have been able to put into.

I grow tired of this nonsense. Lenders Are More Culpable than Borrowers because lenders should only extend loans to those capable of repayment. The greater responsibility of lenders in this mess does not relieve borrowers of their responsibilities, nor does it entitle them to special rights not extended to them by law or by contract.

Why is it when someone wants to screw the banks, they justify it by making borrowers blameless and the lenders the epitome of evil?


Because the conscience was out of the deal.

Peter Tickten's firm is defending more than 3,000 foreclosures.

His goal?

Using things like lost paperwork and robo-signing to get a a mortgage wiped out so the homeowner never has to pay it back.

It doesn't happen often, but it does happen.

No, it doesn't happen ever.

As it turns out, however, the fees some of these lawyers are charging may send some homeowners seeking a defense from their defense lawyers.

Can you think of a worse example of preying on someone's false hope?

Because this lawyer has pioneered a new fee structure: 40% of any mortgage reduction he achieves.

Say you've got a 200,000 mortgage and it gets dismissed: you never have to pay it back.

The fee will be 40% of $200,000: $80,000.

Where does a consumer in foreclosure come up with $80,000?

Why, with a mortgage, of course.

OMG! Who is going to give the borrower this mortgage? Will the attorney lien the property and put the loan owner on a new payment plan? This attorney is trying to crowd out the lender and become the recipient of the borrowers home payment income stream.

And that leaves only one question.

How can a lawyer possibly justify a fee like this?

"If I do that in a case where you lose your leg and I get a million dollars for you, I get 40% of that.

So if I do the same thing in a case where I save you a million dollars on the mortgage on your home, I should be able to get the same amount."

Mr. Tickten said his fee is negotiable and he'd never foreclose on a homeowner to collect it.

But still it seems like when it comes to foreclosures, even when you win you lose.

He would never foreclose on a homeowner to collect? How nice of him. No, if you fail to pay him, he will put a judgement lien on the property — a lien that will be in first position after the mortgage is wiped out — and he can wait until the property sells. Most likely he won't need to wait that long because eventually the former loan owner will want to get access to their newfound equity, and in order to get a new loan, the judgment will need to be paid off first.

Should this owner be given his home?

The owner of today's featured property is a HELOC abuser. He could probably make the argument that he was "sucked in" by unscrupulous mortgage brokers to take out a loan he never should have been given.

Does that mean we should forgive his debt?

Should this house remain in the hands of someone who made a stupid financial mistake at the expense of a new owner buying under today's stricter terms?

Existing loan owners — particularly the stupid ones who over borrowed — are crowding out new buyers. Any of you looking to buy today have to pay higher prices than you should because banks are keeping loan owners and squatters in houses they can't afford. This inventory is being held off the market to screw you, and the higher price you will pay is going to pay the debts of someone who over-borrowed and couldn't afford their house.

  • This property was purchased on 5/13/1994 for $225,000. The owner used a $213,700 first mortgage and a $11,300 down payment.
  • On 12/20/1999 he refinanced with a $215,200 first mortgage.
  • On 2/13/2003 he refinanced with a $280,000 first mortgage.
  • On 10/1/2003 he refinanced with a $310,000 first mortgage.
  • On 1/18/2005 he obtained a $150,000 HELOC.
  • On 7/31/2006 he refinanced with a $417,000 first mortgage, and he got a $150,000 HELOC.
  • Total property debt is $567,000. He more than doubled his mortgage during the time he owned the property.
  • Total mortgage equity withdrawal is $353,300.
  • He recently received his NOD.

Foreclosure Record

Recording Date: 09/13/2010

Document Type: Notice of Default

Let's say this guy gets his loan balance forgiven due to the robo-signer problem. Would that be a good thing? Should borrowers like this be given a pass?

If they are giving away houses, I'll take two.

Irvine Home Address … 92 AGOSTINO Irvine, CA 92614

Resale Home Price … $449,900

Home Purchase Price … $225,000

Home Purchase Date …. 5/13/1994

Net Gain (Loss) ………. $197,906

Percent Change ………. 88.0%

Annual Appreciation … 4.2%

Cost of Ownership


$449,900 ………. Asking Price

$15,747 ………. 3.5% Down FHA Financing

4.87% …………… Mortgage Interest Rate

$434,154 ………. 30-Year Mortgage

$91,782 ………. Income Requirement

$2,296 ………. Monthly Mortgage Payment

$390 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$75 ………. Homeowners Insurance

$308 ………. Homeowners Association Fees


$3,069 ………. Monthly Cash Outlays

-$377 ………. Tax Savings (% of Interest and Property Tax)

-$534 ………. Equity Hidden in Payment

$29 ………. Lost Income to Down Payment (net of taxes)

$56 ………. Maintenance and Replacement Reserves


$2,244 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$4,499 ………. Furnishing and Move In @1%

$4,499 ………. Closing Costs @1%

$4,342 ………… Interest Points @1% of Loan

$15,747 ………. Down Payment


$29,086 ………. Total Cash Costs

$34,300 ………… Emergency Cash Reserves


$63,386 ………. Total Savings Needed

Property Details for 92 AGOSTINO Irvine, CA 92614


Beds: 3

Baths: 2 full 1 part baths

Home size: 1,597 sq ft

($282 / sq ft)

Lot Size: n/a

Year Built: 1989

Days on Market: 6

Listing Updated: 40521

MLS Number: S641019

Property Type: Condominium, Residential

Community: Westpark

Tract: Lp


According to the listing agent, this listing may be a pre-foreclosure or short sale.

Feels like a single family home!! — Largest floorplan in Las Palmas Community with private enclosed entry, 2 car-attached garage with storage, inside laundry and easy access to community parks, pools, tennis courts, and bike paths. This open floorplan has cathedral ceilings, spacious kitchen with plenty of counter space and serving bar into dining room, mirrored wall and fireplace in living room, dining room access to large patio with spanish pavers and built in bbq. Conveniently located near UC Irvine, Irvine business district, 405 fwy and John Wayne Airport. Enjoy the convenience of Irvine, award winning schools, and a 5 star lifestyle in Westpark!

70 thoughts on “Robo-signing scandal creates more false hopes among squatters

  1. AZDavidPhx

    I am still waiting for wave of sob stories to come crashing ashore; bringing to light all of the senseless and unjustified foreclosures of people who were current on their mortgage. We were told that the banks were not properly verifying all of their paperwork. We should be hearing tons of stories about innocent borrowers being caught up in it. The media is suspiciously silent. All we get are self-serving scumbag lawyers and politicians whipping up the story for their own benefit. I must say, for such a widely pumped “scandal” there sure are not many victims stepping forward. The best they can find are people who stopped paying their mortgage 10 years ago and were “promised” loan modifications only to be foreclosed anyway.


    I disagree with the statement that these debtors used “the bank’s money”. This kind of talk perpetuates the myth that banks actually loan out their own money when what they really do is convert the borrower’s IOU into bank credit without any form of consideration. Nevertheless, these debtors pledged to pay the amount and they should.

    I would like to understand the logic that is behind the free house logic. Sounds a lot like a free lunch to me. Is this like the Monopoly game we played as kids? Did these folks land on the Community Chest square and get dealt a card that reads “Bank Error in your favor! Collect one free house !” I think not.

      1. Honcho

        The FIRST person mentioned in the article was given notice of a different foreclosure because the real property records indicated he had an interest in the home (based on a car accident and lawsuit he filed years earlier that resulted in a judgment). When a foreclosure happens, notice has to be given to EVERYONE that has an interest in the property.

        This wasn’t a case where that guy was being wrongfully foreclosed, or even being forecosed on. And that is the first story they lead with in the article? If that is the author’s best bullet, it might be time to find another angle for the story…..

        I’m still not sure I have ever seen a report of someone actually losing their house when they were current on their payment.

        1. AZDavidPhx

          jumpcut, you’ll have to do better than pump an article full of one sided house debtor claims. You have no clue if the people are telling the full story or what they are conveniently leaving out. You can sense the author’s bias in the first paragraph where he refers to the US Marshal Sedan “peeling out” out of the driveway as though it was akin to driveyby shooting or Klan raid. The guy claimed to have heard a noise while in the shower and didn’t get to the door in time. We do not know if this is true or not – yet the author presents as though he was actually there in the shower with the person.

          And also, I have never said that mistakes are not made. Of course the banks are going to transpose a number in an address somewhere. The author makes the horrifying observation that these incidents are on the rise without taking into consideration that foreclosures themselves are on the rise. This is like saying crime has doubled and not bothering to note that the population has doubled too.

          When the banks do screw up, they pay. They are responsible for lawyer fees and costs that the person incurred to defend themselves. Just as the author was forced to admit in the last statement after making the statement that the banks were forcing people to pay lawyers as though honest folks were being bankrupted with lawyer fees that they would not get back.

          Also notice that the lawyer that was interviewed said she believed in every case that the debtor was not in default. Pay very close attention to that wording. I don’t care what some Joe Blow lawyer believes, I care about what a judge, a neutral third party with no stake in the outcome finds amid the presented facts.

          Show me a court case where someone was obviously wrongfully foreclosed and some court somewhere enforced it. That is the whole point. We don’t tell police to halt all arrests because a few innocent people were detained.

          This article of consumer complaints is just infotainment for the masses.

          1. Swiller

            I’ll have you know David, I’m going to walk away from my house because I want prices to go lower so good folk like you can afford a home. I’m HELPING to lower home prices, but no, you want everyone to keep paying an insane price to artificially keep home prices high.

            Which is it? Oh that’s right, you want prices to drop, while people are in debt servitude, THEN you want to own a home so YOU can make a profit. Bottom line is…everyone is doing things for their own selfish interests, including you.

          2. AZDavidPhx

            I could not care less about profiteering in real estate. I want the damn thing paid off and affordable for future generations – unlike the boomers who control most of the real-estate these days and think it is just fine to stick young families with horrendous housing debt to pay for their own retirements.

      1. jumpcut

        Anonymous, you’ll have to do better than pump an article full of one sided house debtor claims. You have no clue if the people are telling the full story or what they are conveniently leaving out.

        Show me a court case where someone was obviously wrongfully foreclosed and some court somewhere enforced it. That is the whole point. We don’t tell police to halt all arrests because a few innocent people were detained.

        This article of consumer complaints is just infotainment for the masses.

        1. AZDavidPhx

          Jumpcut, please explain what this article has to do with robosigners and unchecked paperwork?

          Explain how eliminating the robosigners would have made a difference in this scenario where the lady was making her payments to a scam shell company instead of the bank?

          The fact of the matter is that her payments did not go to the right place so her account was in a legitimate default as far as the bank is concerned.

          The bank may be liable for damages caused if it is shown that one of their employees engaged in fraud but that is outside the scope of the discussing that is about robosigners and unchecked paperwork.

          You can’t just go and dredge out a article of someone who got caught in a scam and then try shoehorn it into the discussion to claim that is was somehow related to robosigners.

          Let’s at least keep the arguments intellectually honest here. Thanks.

          1. jumpcut

            Mr. Phoenix Renter, I agree with you 100%. Please re-read my response. I would have thought that you, especially, would appreciate it.

      2. AZDavidPhx

        My problem with this article is that it has nothing to do with unchecked paperwork, robosigners, and people who are current with their mortgages getting caught up in the foreclosure.

        It is acknowledged in the article that this lady was in-fact not current on her mortgage because she was stupidly mailing her payments to a scam shell company instead of the real servicer.

        It is one of those isolated instances where somebody fell for a scam. It may well be that the bank is going to be liable for the what happened but they will have to figure that out in the courts.

        The fact of the matter is that the bank did not receive her mortgage payments so they initiated foreclosure. What else do you expect them to do? I am pretty sure that they were not aware of the scam and the shell company.

        It’s a pretty outrageous story, but has nothing to do with robosigners not verifying paperwork. Even if they had double triple checked everything, the account would still show she was in default.

        Keep trying.

  2. Planet Reality

    The next evolution of this blog appears to be a “clip show” of previous blog post on the general housing market – but let’s not forget the loan details for the irvine poor schmuck debtor of the day which gives us all a greater joy and understanding of the Irvine housing market. No details on the opportunity of a life time in Vegas, no details on Irvine, only some poor schmuck debtor in Irvine exposed for all to enjoy.

    1. wheresthebeef

      Hey PR, would you care to share your opinion on the rising mortgage rates? You came here and crowed about how right you were, are you still confident in that?

      1. matt138

        Well, the stimulus wasn’t big enough. obviously we need more.

        Focusing on Irvine specific, bullish info is similar to focusing on 3% rates. There is a bigger picture which will affect both.

      2. AZDavidPhx


        The fact that interest rates are now rising doesn’t mean anything. It just gives them more room to fall now.

        Be on the watch now for the slightest decline followed by alll of the lemmings coming out and crowing about how PR “nailed” it once again.

        That’s the magic of PR and his one or two fanboys.

  3. Mark

    Two enthusiastic thumbs up for the “Star Wars” meme.

    Sometimes I think the NAR, Realtors, loan officers and the other Darth Vader-types pulled a Jedi Mind Trick on the masses with all of this stuff.

    Peeling the onion we find out that most home buyers were resolute and under their own volition the entire time.

    The only way out of this mess is to raise interest rates, discourage debt, encourage more investment and savings. That lead’s us to a dark place, no doubt, but it’s probably not terminally dark. There will be probably be light at the end of the long tunnel and it most likely won’t be an train.

  4. romeotybalt

    I am guilty of being a house squatter for over 14 months. I will squat as long as I can before I move out. Fear IS powerful.

    I am a lazy, entitled, spoiled and arguably a POS American. So what, sue me. By not paying I am saving over 4k monthly. How powerful is that.

    I guarantee that if anyone defaults and finds that they can save all their cash, fight the foreclosure for nearly 2 years as they live for free, they will not pay either.

    And if they do, then they’re stupid!

    Why should I pay? I said I would, but if that’s reason enough, then every other contract like marriage would be unbreakable.

    Contracts are made to be broken. It’s called market risk. The bank assumed this risk when they were handing out money.

    Our society assumes the risk of bailing out the banks when we elect officals that do not act in our own best interest.

    I don’t blame the banks for trying to kick me out. Just let them try! Filing motions to quash the banks overworked, error-prone lawyers is easy.

      1. romeotybalt

        Thank you for the compliment.

        And as a person of color, I have learned from individuals of all kinds that it useless to pay on an under performing investment.

        The lessons that I have learned from my own culture is the most instructional.

        Continuing to pray for relief instead of proactively navigating in your best interests are the mark of a brainwashed people.

        1. EconE

          What does being “a person of color” have to do with it?

          What lessons have you learned from your own culture?

          Is your culture a culture of shysters?

          I doubt that any culture has a monopoly on trying to game the system. Blaming your moral shortcomings on your culture just makes you an even bigger piece of shit.

          1. matt138

            Agreed. Color has absolutely nothing to do with it. I am colored. I go from pasty white to pink to red to tan.

          2. romeotybalt

            Color in and of itself is inconsequential.

            However, due to cultural norms, strategic default is not an issue that is discussed in dept on any broad levels in cultures of individuals of color. It is a fact.

            The lessons from my culture are what NOT to do. As in do not throw money away on things that have no worth, like an underwater home.

            My culture is one of the good, the bad, the beautiful, and the ugly—like all others.

            My culture has no monopoly and I am not blaming my culture for me walking away.

            You got me, I am a piece of shit. A piece of shit can walk—–away from a 400k home that is worth 150k.

            Who says shit don’t stink?

    1. IrvineRenter

      “I am guilty of being a house squatter for over 14 months. I will squat as long as I can before I move out.”

      I don’t blame you. With the way the system works, why would you do anything differently?

      To the degree you are successful is the degree to which others are encouraged to strategically default.

      1. awgee

        I guess I am just stupid. During the last cycle I was upside down and just went along making my payments as I had agreed to.

        Somehow I think that experience contributed to my now having the strength of my convictions no matter how much others may tell me I am wrong, and I truly doubt that I would be in the position I am in now had I not put my word above convenience.

        I dunno, maybe I am brainwashed. My parents taught me that my word would be of more value to me than anything I might acquire. Maybe that is brainwashing, I dunno.

        As a person who is of Mexican ancestry, (is that a person of color?), my culture also had a great deal of influence on me.

        1. romeotybalt

          As a Mexican-American your strenght of culture flows through your veins. You believe in family, and country.

          You are a person of color. Even if you weren’t the lessons are the same.

          What is your lesson to your family?

          Pay the banks what you owe, or provide for them?

          Go down with the ship, or move on and make a new life?

          Live under constant debt-induced tension, or with a clear mind and heart prepared for the consequences?

          Only you can answer that.

          But for me, the question was the answer.

          I promised my family to provide. I am fulfilling that promise. In 20 years when this post is long forgotten and the market has recovered my family will be there.

          And they will say my dad defaulted, but I love him for it. He was able to send us to good schools, and provide healthcare.

          I saw my own father, a strong and beautiful man work two jobs for 16 years.

          My father also dropped dead at 54 with a heart attack when his health was ruined from working to pay off debt.

          What is my legacy to him? Helping bailed-out billionares by mansions in Switzerland because I said I would?

          I decline……..

          AWGEE, you know what to do. The question is do you have the strenght to follow you convictions.

          1. awgee

            My word is not dependent upon the result or who may or may not benefit from it. It stands alone.

            I do not think you understood. I was underwater in the last real estate cycle, 1990 – 1996. And I paid my mortgage. And I am glad I did.

            Did it cost me? Of course. But my integrity does not have a price. I care not for what others may do. I care not if they call their decision a business decision. My decision was based on my word.

            Did my children do with less? Materially, absolutely. But my guess is that they know that I will do what I say no matter what and they can count on my word no matter what it may cost me.

            I dunno, maybe they would have been better off with better schools, more clothes, cell phones, etc. But, instead they just have what I say.

          2. ochomehunter

            Lets not tell others what is right and what is not right. There will always be people looking to go along with the system as it allows and then there will be people who will follow all the rules.

            1. If stretagic defaulting is the only choice you got to save ur family, do it! Doesn’t every business do it? Businesses cut head counts to meet bottomline. When it comes to survival, do what it takes.
            2. If you make decent money and downturn has not affected you, you may choose to abide the rules and keep paying. Again, its a personal choice. We should not be angry at folks, we should be angry at the system that encouraged it.

            I am a firm beliver that once you get into wrongdoing as system allows you, you sooner or later become a crook (lions are not maneaters by birth, it takes first blood to become one). You can pretty much collect food stamps today as there are loop holes in the system. Ways to committing fraud are endless and greed overpowers mind once you get hooked. Those who default due to hardships dont fall into greed trap.

            I dont want to pass on to my kids my bad behaviour as I am their role model. Again, if I am suffering and my kids are hungry, I would even rob a bank.

          3. Mark

            I think romeotybalt’s position is bullshit.

            I don’t know exactly what rotation we’re on but it’s official: We’re circling the drain.

            When will we start responding to the same basic moral questions with similar answers? When we sign a contract, we uphold your end of the agreement to the best of our ability, or default on the agreement and face the associated consequences. We do our part along with everyone else or we get the hell out of the way and let somebody else do it.

            Instead we seem content to make up all sorts of exceptions and excuses for ourselves so that reality fits and favors our personal perspectives and preferences.

            “Didn’t you know? The Newtonian theory of gravity that doesn’t apply in MY house.”

            “Moral hazard? Never heard of it! It must apply to everybody else but me.”

            Is this for real?

            OK. Fine. But if that’s our answer, if that the compass we’re going to be using and the direction in which we’re all headed, then let’s at least not pretend that there aren’t dire consequences for EVERYBODY about being wrong.

            As for your answer: squatting, congratulations man on the 14 months. A tip of the hate and a salute for another 14 more! Fantastic.

            Just when we thought there would be a shortage of despondency and disgust from the next generation of young Americans, some one comes along and tops it off with “it was all about my survival!” goodness.

            Pure gold.

          4. Swiller

            Mark, how many people do you know who have gotten a divorce? Do you think it’s more important to keep your word on finances, then to your FAMILY?

            The divorce rate is over 50%, and these are people who gave their WORD, in front of witnesses, to spend their lives together…and you care not a whit about that, yet when it comes to MONEY, boy oh boy, we are circling down the drain.

            You cannot serve God and mammon, and by our actions, it is apparent for the majority of us, it is the latter. Don’t forget to attend our special divorce recovery prayer class for the active adulterer/fornicator. After all, we’re not perfect, just forgiven (except for debts, debts are not forgiven)

          5. irvine_home_owner


            I would just like to point out that someone’s divorce does not cost the taxpayers as much as someone’s squatting.

            But given the fact that we each don’t get our own personal bailout, if I were in a situation where we had to cut and run… I would think about it. Not sure if I would squat though… because that crosses the line in my mind.

          6. Mark

            Since you asked, yes, I know people who have divorced. Alcoholism was the reason. Thankfully the only thing destroyed was the contract itself (no kids, no house, no accumulated wealth). All things considered, pretty “easy”.

            I’m not really comfortable equating a divorce situation to a mortgage default. Both result in a lot of bitterness, irrational thought and greed, and you can easily rationalize all kinds of good reasons to default on your mortgage or good reasons to divorce your spouse.

            I’m not saying that breaking all contracts is always morally and strategically the wrong thing to do.

            I am saying that, if things with that girl (house)don’t work out, don’t stalk her, squat in her place, drive her car around, throw bags of cement down her sewer system, and say she “belongs” to you.

            Give somebody else a chance.

            Make sense?

          7. Swiller

            Yes, thank you for clarifying that. I just like to point out that there are a host of other things much more detestable than squatting in a house, but those don’t get the attention.

            In addition, the bailout went to the banksters, that’s why people are squatting. If the system moved as fast as it did when the banksters were pumping the bubble, no one would be squatting at all.

            Whose fault is that? How many homes sit EMPTY, and people are “OK” with that, but Lord forbid someone actually use and live in the house, that’s immoral. Talk about being backwards….

    2. Enlightened


      You’re my hero. Very smart and brave to maximize your savings.

      IMHO, there’re two types of homeowners who haven’t tried what you did. First type are ones who are too stupid to figure it out. Second type are ones who are smart enough to figure it out, but too chicken to follow through!

      I agreed with IR as well. The system encourages people to take this path, so why not take full advantage.

      Well done my friend, and spread the words on your successful strategy.

    3. AZDavidPhx

      Yes, you are saving 4K monthly now that your 1K monthly payment jumped to 4K and you can no longer afford to pay even if you wanted to. But go ahead and keep acting arrogant while pretending you are in control of the situation.

      1. romeotybalt

        I don’t mean to appear arrogant, but I AM frustrated.

        My payment didn’t jump and my loan was prime at nearly 3k monthly. The extra 1k comes from property tax, insurance, etc.

        After applying for a loan mod my bank told me to miss 3 payments.

        When I did they decided to foreclose and could not gurantee they would stop the action even if I paid them the 3 months payment.

        After seeing how no mortgage adds real savings to my family’s balance sheet.

        I don’t ever want to afford a mortgage again. Renting is cheaper and smarter.

        But you’re right about one thing, I am not in control…..My wife is. And she has ordered me to fight the foreclosure while we save 6 months rent to overcome our wrecked credit.

  5. ochomehunter

    on a side note, a friend of mine had two homes that he let go and got foreclosed on a year ago. Last month, out of surprise he receved collections notice of $27,000 that he owes on the 2nd mortgage. If folks are going after $27,000, you can be rest assured that these HELLOC abusers are not going to walk away, collections are going to continue to haunt them for a long time.

    May Be IR needs to have a thread where we can track such issues. I know a friend of mine who invests in such deals, where he buys the note from lenders/banks for pennies on a dollar and then goes after the defaulter for whatever he can collect. He first does his research on who has the money and has not filed chapter 11, then its all easy.

    Has anyone else heard any stories like this “collections calling the HELLOC folks” and those who walked away?

    1. Perspective

      Yeap, in CA if the mortgage is non-purchase or investment property, the second let’s the first foreclose thereby preserving the second’s “one action” allowed. The seconds can spend a small amount of money collecting. The insolvent borrowers will file BK, but you’ll find some solvent ones. Then you work-out a payment plan with those.

      1. romeotybalt

        This can be remedied easily.

        File bankruptcy. But do don’t complete it if you are expecting additional future debts.

        Purposely ensure that you own credit remains extremely poor.

        This is easily done by paying ALL payments online at the last moment so they will foward your obligatory payments late.

        People with cash don’t need credit. So don’t use it.

        I found that in my case, credit use was a failure of my formerly undisciplined life.

        I forgot the teachings and lessons of my people indentured in a credit, debt death cycle.

        We don’t really need credit.

        Do not ever, ever, have more than 500-800 dollars in a bank account at one time.

        You wouldn’t want to give anyone looking at your bank accounts that you have a high average daily balance therefore an ability to repay, if it isn’t true.

        Banks are paying less than a percent interest on deposits. So why give them your money when you can earn nothing by using a safe deposit box?

    2. awgee

      I am pursuing the purchase of the 2nds/HELOCs of certain people in my neighborhood whom I know are not destitute and have the same income as previous to their default.

      1. Swiller

        You go awgee, Mister Rogers and Catpain Kangaroo are cheering you from purgatory to get them evil debt dodging heathens!

        Too bad someone couldn’t devote time to find out what laws you break, and then harass you from there. Are you sure you meet all your applicable electrical/plumbing/code enforcement laws? Speed ever? Ever, *gasp* watch porn?

        Hey Jesus, got anything to teach these people?

        “forgive us our DEBTS, as we forgive our DEBTORS”

        King James Version, but soon changed to “trespasses” in order to appease the ruling aristocracies (aka banking cartels)

        1. awgee

          You are making some rather large assumptions. I am not out to get anybody. And your vehemence may be demonstrating your own extreme bias.

          The purchase of defaulted HELOCS is a business decision, as is the pursuit of those only those on which I know payment can be enforced.

          1. romeotybalt

            Awgee, since you are a person of your word, I’m sure your HELOC debtors can count on you to “come after them”.

            Yet, I am sure you rationlize it by “providing for you family”.

            While our menthods are different, we are part of the same hypocrisy.

            It’s seems a bit ironic that you judge squatters for not keeping their word, yet bottom feed on the very debt of which they are attempting to default.

            However, from a business sense, it is a good idea.

          2. awgee

            Exactly where in my posts did I “judge squatters for not keeping their word”? I think that if you read my posts, you will see that I told of my experience and what my experience and word meant for me.

            What I find ironic is the use of terms like “squatters”, “come after them”, and “bottom feed” from someone who is accusing someone else of judging.

            There is nothing in my position or behavior which is hypocritical. Purchasing loans does not necessitate rationalization. Do you think it does? Are you insinuating or stating that there is something immoral or untoward in purchasing loans? And collecting payment?

            I think if you read my posts, you will see that I accused no one of bad behavior. I am curious as to why you find it attractive to besmirch me with accusations of “coming after them”, rationalizing, hypocrisy, judging, and bottom feeding.

          3. awgee

            Clarification: My position and behavior are not hypocritical in the context of these posts. I am quite sure I engage in hypocrisy in many manners of everyday life.

      2. darms

        What sort of discounts are you looking for in the 2nds/HELOCs you are pursuing? While I acknowledge your labor is worth something, what percentage of the debt itself do you hope to collect? Do you spend some time evaluating the finance situation of each & every debtor, preferably before you buy their debt? What do you think of “blood from a turnip” situations as when cheap enough, one can always extract a few fees/pint?

        1. awgee

          Yes, I will investigate each individual situation before purchasing, and squeezing blood from turnip does not sound worthwhile.

  6. awgee

    IR – Have you checked to see how many Irvine auctions received opening bids today?

    Maybe it is just a fluke, but three Coto properties received opening bids today and one of them is dirt cheap, for real, get rid of this mortgage opening bid.

  7. Jake JJ

    Who to sympathize with, the overextended squatter or the lazy and thieving bank? Who to sympathize with, Syria or Iran?

    1. Swiller

      The question was answered when the bailout was voted for.

      Do you see homeowners getting prinvipal reductions? No.

      Do you see banksters getting paid their losses? Yes.

      Would homeowners have been helped if the U.S. government used that money as principal reduction, keeping people in their homes (and changing loan terms to non-recourse!) rather than to cover imaginary losses?

      Your fellow citizens took the sodomizing, the people losing the homes will take it twice because they have to pay taxes as well.

      1. AZDavidPhx

        Oh but Swiller, there is one key difference. The banks get to “pay back” the bailout money. Sure, the table tilted and the game is rigged for them to make easy profits, but they are technically “paying back” the money. By God, that taxpayer is going to be made whole – WHOLE I say! Of course by the time all that money trickles down to the little people it will be worth much less.

        The house debtors demanding the principle reductions are basically asking for a free/subsidized house. They got their help in the form of these loan mods but clearly folks would rather just walk.

        If any of these screwed house debtors are voters then they can give themselves a nice pat on the back for playing Democrat\Republican spin-the-bottle all these years. Maybe this will teach some of them to stop demanding that government step in and do something everytime they get a hang-nail.

        1. Swiller

          Nice! Man I love it when you get me to laugh out loud reading. I could just picture a 1890’s huckster up on the stage proclaiming “Your body is going to be made whole – WHOLE I say!

          The bailout was the equivalent of the Modern Day Snake Oil.

      2. matt138

        government paying for principal reductions and goverment paying for bank losses are equally imprudent.

        1. Laura Louzader

          Government paying for principal reductions and government paying for bank losses are equally IMMORAL.

          And one moral lapse leads to and justifies more. Just as government-funded housing projects and subsidized rentals for the “poor” led, by the 1950s, to massive subsidies for individual home purchases, the construction of auto suburbs far from cities, and the destruction (by FHA redlining) of those cities, the current array of subsidies designed to make homeownership affordable and to prop up falling prices is leading to still more rent subsidies and construction of more housing projects (though they’re not called that anymore), leading to still higher taxes and higher prices, and more people living in housing one way or the other subsidized by taxpayers.

          Something we ought to learn is that if something is imprudent, it is also most likely immoral-that is, it violates individual rights as well as good sense, and involves taking something by force from one party to give it to another according to rules that have nothing to do with who earned or paid for what.

          And if it’s immoral, it is also imprudent- it rewards imprudent behavior and creates perverse incentives.

  8. Major Schadenfreude

    “This attorney is trying to crowd out the lender and become the recipient of the borrower’s home payment income stream.”

    Well stated. A battle royal among parasites.

  9. nefron

    Your home is not a performing asset. What we all supposed to do, stop paying the bank once our property value goes down. How much? When it’s one percent under the value we bought it at? Or is the threshold five percent? What is it?

    What do you care, if you bought it to make a home for your family until your kids are grown and gone, 20 or so years from now? If the only thing a house means to you is something you think you can make some money on and dump it and move on when you can’t afford it, you don’t have your family’s best interests at heart.

    You all act like your house and your stock portfolio are the same thing, nothing more than a financial investment.

    And stop blaming the baby boomers for the housing bubble. How many 30 and 40-somethings were busy trading houses and spending their houses? Plenty, a lot more than the 50 and 60-somethings close to retirement. You both sound like 30-somethings to me. Just give it up and admit your generation is just as greedy as everybody else.

    1. matt138

      romeo overleveraged because he was a speculator. Now that the tide is getting lower, he realizes the error of his ways and jumps ship.

      Dont speculate next time and remember, your realtor buddy’s advice is on par with that of a used car salesman.

      1. romeotybalt

        I was not a speculator, since it the home is my primary residence.

        However, if my primary residence is to be looked as an investment-class asset, then yes, I was a speculator, so were millions just like me.

        However, the real issue is my house is underwater, and I will NOT be paying it off.

        And yes, I am happily jumping ship.

  10. darms

    A L. Randall Wray article
    about MERS @ The Huffington Post really pushed home that MERS broke a chain of title system that was in place for hundreds of years, plus the apparent main reason for the initial creation of MERS was to defraud county governments of collecting title transfer fees when each mortgage was sold. Please dispute that, those on the right.

    But also please note, I have no sympathy w/HELOC abusers either, if IR has them at B- or worse, f*ck ’em. However, those of us who are sufficiently u/w such that strategic default makes sense, do it, it’s nothing less than the average bankrupt corporation would do. (& despite current court rulings, corporations should NEVER have more rights than citizens).

    My sole interest in commenting on this subject is simply that I do not think my title to my real estate should be any better than yours simply because my property was purchased outright 18 years ago. And all that MERS stuff, looks like it was designed to facilitate fraud, all in the name of greater profits. Shame on them & please someone investigate. (unlike Obama 01/11/2009)

    1. Honcho

      Court decision after court decision disputes the notion that MERS is/was a mechanism for fraud. The Courts have consistently ruled that MERS is not fraudulent. I’m not sure what else is needed to convince you or anyone else?

      This isn’t a left or right issue.

      1. Catholic

        You must be working for a bank. Mers is getting atomized in the courts. Idaho, Kansas, California just off the top of my head.

        1. Honcho

          I represented MERS for a long time in court cases here in California. I can show you decision after decision that states MERS is not fraudulent. If you have any case to the contrary you can point to, please share. It would be news to me.

          Courts finding that MERS does not have standing to conduct a foreclosure in a judicial foreclosure state or to lift the automatic stay in bankruptcy court is wholly different than finding that MERS is engaged in fraud.

          1. awgee

            Honcho, thanks for pointing that out. But to us regular Joes, not having standing to conduct a foreclosure sounds pretty serious.

          2. Honcho

            MERS doesn’t conduct foreclosures. Attorneys were sometimes bringing foreclosure suits on behalf of MERS, this was not in compliance with proper protocal. Same issue when trying to lift the automatic stay.

            It’s not serious and is an easy fix. Simply go back and bring the foreclosure on behalf of the proper party.

            People are trying to make MERS out to be some evil mechanism. It is nothing more than a system to track transfers in interests.

          3. awgee

            I am confused. You said “Courts finding that MERS does not have standing to conduct a foreclosure in a judicial foreclosure state”. Why would a court find that MERS does not have standing to conduct a foreclosure if “MERS doesn’t conduct foreclosures”?

          4. awgee

            Why would a court find that MERS does not have standing to do something which you say they do not do anyways?

          5. Honcho

            I don’t want to disparage a group of attorneys, but those that work at/run foreclosure mills aren’t going to win any lawyer of the year awards. They simply weren’t following protocal and were bringing suits in the name of the wrong party.

            I can only tell you what’s in the MERS handbooks and guides that I have seen that detail the proper procedures for conducting a foreclosure in a judicial foreclosure state. Never is a foreclosure to be brought in MERS name. Pretty simple. If those procedures weren’t followed, that isn’t fraud, it’s an attorney screw up. (There’s actually only a handful of these cases, so the claim above, that MERS is getting “atomized” all over the place is something I just haven’t seen).

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