How attorneys enable squatters to game the system

Attorneys have mapped out the longest route from default to vacating the property. Many delinquent borrowers are following this path.

Irvine Home Address … 2 SUNPEAK Irvine, CA 92603

Resale Home Price …… $3,075,000

Tailored suits, chauffered cars

Fine hotels and big cigars

Up for grabs, up for a price

Where the red hot girls keep on dancing through the night

The claim is on you

The sights are on me

So what do you do

That's guaranteed

Hey little girl, you want it all

The furs, the diamonds, the painting on the wall

Come on, come on, love me for the money

Come on, come on, listen to the money talk

AC/DC — Money Talks

A popular method gaming the system for maximum benefit is (1) to quit paying the mortgage, (2) exhaust every procedural remedy made available, and (3) squat in a house for as long as possible. I can see the appeal of no house payment, and I don't know that I wouldn't be gaming the system if I were in those circumstances, but there is doomsday feeling of foreboding and certainty of unpleasant outcome that would make such living untenable for me. It's one thing to rent and feel less rooted as a function of your mobility, but it is horrifying to know your accommodations are temporary and you will be forced to leave at some random time with short notice.

People do decide to stay on enlist the help of specialists, often attorneys, to help them game the system to maximum advantage. From an actual letter written from an attorney to a trustee regarding a property in Las Vegas, Nevada:

Our law firm has been retained by Squatting Debtor to rescind the foreclosure of the property at I8 Your Neighborhood, Anywhere, US.

The names and addresses have been omitted, but the remainder is verbatim text.

As you know, one of the purposes of the required statement in the notice of default is to afford the debtor an opportunity to cure the default and obtain reinstatement of the obligation within three months after the notice of default was recorded as provided in §107.087 of the Nevada Revised Statutes. The subsections of this statute require the listing of a physical address of the property NRS § 107.087 (1)(b)(1). If there is no physical address and the Notices are not property posted and mailed to that address, then the foreclosure is void for lack of due process. Here the homeowner had no notice that his own home was being foreclosed and there is no physical address listed on the recorded Notice of Default, filed April 29, 2009.

April 29th, 2009? This letter is concerning a foreclosure sale in December 2010. If the owner was three months delinquent on his mortgage in April 2009, he hadn't made a payment that year. He hadn't made a mortgage paying since late 2008, perhaps earlier if the bank danced for a while before issuing the notice of default.

Are we to believe that a guy who has not made a mortgage payment in two years is surprised by a foreclosure? This squatter was somehow unaware of his predicament? Has this attorney managed to find an error in the process so egregious that this squatting-former-owner should continue to stay in the property with no payments indefinitely?

In the state of Nevada, the beneficiary or the trustee must comply with certain statutory requirements prior to exercising the power of sale under the deed of trust. According to NRS 107.080 (2)(c)., the power of sale must not be exercised until the beneficiary, the successor in interest of the beneficiary or the trustee first executes and causes to be recorded in the office of the recorder of the county wherein the trust property, or some part thereof, is situated a notice of the breach and of the election to sell or cause to be sold the property to satisfy the obligation.

Due to the error in the Notice of Default, we expect NDSC to rescind the foreclosure sale of this property.

A missing address on a sheet of paper at the recorders office? Really? This guy gets a free house for that? If someone does get a house that way, the cost of serving documents and processing paperwork for routine real estate transactions will go up as every step is double and triple checked for accuracy and completeness.

We understand a third party bought at the auction.

Yes, which means the sale has happened, and there isn't a prayer of getting the house back for the occupants. Foreclosure is the end of the line. It's the river card in a long game of payment poker. Any motions or maneuvers need to be completed before the sale. Bankruptcy attorneys are noted for attending foreclosure auctions with last-minute documents to stop that day's sale. Once the sale happens, it's over. The house is sold, and any old claims to title are wiped clean.

However, if NDSC is not successful in obtaining a rescission of the sale with the cooperation of the 3rd party, then a quiet title action will be in order and we will sue for wrongful foreclosure and wrongful eviction—if it comes to that.

We will be seeking compensatory damages and attorney fees in the action. It is in your best interests to settle this matter by paying the 3rd Party purchaser at the auction the amount of his bid (as provided in your agreement) and rescind the sale.

Time is of the Essence as my client is currently being threatened with forced eviction. If we must bring a claim, it will be brought within the short statutorily allowed period and your expenses will increase exponentially as our reasonable attorney fees are $350 hourly plus $100 hourly for rushed work If our clients are actually evicted,

Threatening with loss of money. If they tie up this property with some spurious quiet title action, it is the attorneys and debtors who should be prepared to pay the expenses of the victorious defendant. Fighting foreclosure is a good way to give the last few dollars you have to an attorney and gain nothing. This will do nothing to slow the wheels of justice through the eviction process.

this would be very bad news in the presses: Homeowner Evicted While Making Trial Payments under HAMP and Trustee Thumbs Nose at Nevada's Foreclosure Statute's Requirements.

Those would be great headlines on the IHB! Does someone, somewhere fear headlines like those so much that they would give this family a free house?

Again, it is in your best interests to rectify this immediately!

Remember, this letter went to the trustee for the sale, not the new owner. So put yourself in the Trustee's shoes and ask yourself what you would do next.

First, you ask yourself if Mr. Badass attorney would go through with his threat to bring quiet title action on the property. The client is a squatter, so they don't have the resources to pay the attorney's bills. Therefore, if Mr. Badass wants to get paid, he must win the case and get awarded his fees by the judge. This will cost Mr. Badass about $25,000 in attorney time to take on a hopeless case with limited prospects for fee recovery.

If I'm the trustee, I don't think a quiet title suit is forthcoming.

Perhaps there is an emotional release in letters like this one. The hopeless debtor facing eviction from what used to be their house needs to feel like someone is protecting them and looking out for them. This emotionally charged letter has the bravado of a knight riding to the rescue of this family in distress. Its all theater, of course, because the guy has no chance to prevail. The debtor bought a badass attorney to cover his back as the he slinks away in shame and squirms into a rental.

The debtor is paying his last dollars to an attorney for emotional support. Is that less expensive than a therapist?

Has it really gone up in value more than 50% over the last 3.5 years?

Today's featured property was purchased for $1,800,000 on 6/15/2007. The owner used a $1,000,000 first mortgage and a $800,000 down payment. No HELOC abuse today, just delusion on a grand scale.

Irvine Home Address … 2 SUNPEAK Irvine, CA 92603

Resale Home Price … $3,075,000

Home Purchase Price … $1,800,000

Home Purchase Date …. 6/15/2007

Net Gain (Loss) ………. $1,090,500

Percent Change ………. 60.6%

Annual Appreciation … 15.0%

Cost of Ownership


$3,075,000 ………. Asking Price

$615,000 ………. 20% Down Conventional

5.07% …………… Mortgage Interest Rate

$2,460,000 ………. 30-Year Mortgage

$641,793 ………. Income Requirement

$13,311 ………. Monthly Mortgage Payment

$2665 ………. Property Tax

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

$513 ………. Homeowners Insurance

$237 ………. Homeowners Association Fees


$16,726 ………. Monthly Cash Outlays

-$1929 ………. Tax Savings (% of Interest and Property Tax)

-$2918 ………. Equity Hidden in Payment

$1220 ………. Lost Income to Down Payment (net of taxes)

$384 ………. Maintenance and Replacement Reserves


$13,483 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$30,750 ………. Furnishing and Move In @1%

$30,750 ………. Closing Costs @1%

$24,600 ………… Interest Points @1% of Loan

$615,000 ………. Down Payment


$701,100 ………. Total Cash Costs

$206,600 ………… Emergency Cash Reserves


$907,700 ………. Total Savings Needed

Property Details for 2 SUNPEAK Irvine, CA 92603


Beds: 5

Baths: 3 full 1 part baths

Home size: 6,029 sq ft

($510 / sq ft)

Lot Size: 11,267 sq ft

Year Built: 2010

Days on Market: 82

Listing Updated: 40513

MLS Number: S634114

Property Type: Single Family, Residential

Community: Turtle Rock

Tract: Ch


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28 thoughts on “How attorneys enable squatters to game the system

  1. Alan

    Ignoring the “backyard” – in this case almost literaly a yard behind the house – it does look like a million-dollar house. But $1m and not $3m.

    I’d further say hotel design, rather than restaurant.

    I guess some people want that, and they are welcome to it. Even if money were no concern or the price-to-value looked good, I personally have zero interest in living in such a house. Good luck to the current owner and next buyer.

  2. romeotybalt

    The untenable feeling of squatting is a bit overestimated.

    Actually it is sort of a rush every time the thought comes to mind.

    The feeling of dread may appear though at thoughts of eventually paying rent.

    Unless of course you are moving in with parents, or used the squatters dough to buy a home outright.

    It’s kinda hard getting used to paying a mortgage that’s too damn high.

    It may be a bit like the feeling that there is no way you will pay $200 for Nike sneakers when $35 knockoffs will do.

    The good thing is that the new frugality may permeate every purchase, which in turns allow for more savings.

    Ironically at a time that the sqatter probably has more discretionary funds.

  3. Honcho

    Welcome to my (former) world, IR. I had to deal with this kind of nonsense from attorneys on a daily basis (although my firm and I weren’t called in until there was a lawsuit was actually filed).

    There is a 0% chance that this chance accomplishes anything other than: 1) allowing the defaulted borrower to continue squatting, and 2) allowing the “attorney” to collect a monthly fee from the defaulted borrower (you just don’t see these attorneys take this type of case on a contingency fee basis for obvious reasons).

    There have been a string of infamous attorneys in Southern California that made millions of dollars running this scam on borrowers. I swear that the business model went like this: “We can get you a free house, just pay this monthly fee and, even if we aren’t successful, you will have been able to stay in your home and you are paying us less than you would be paying in rent.” That business model worked for a while. Until judges got fed up with the bogus lawsuits and the state bar shut this type of practice.

    I’ll also tell you that any hope for a loan modification went out the window as soon as we were hired. There were/are real costs associated with retaining an attorney to defend this type of bogus claim and my clients were not about to invite additional lawsuits by settling any claim against them in the form of a loan modification (yet, these attorneys representing defaulted borrowers were telling the borrowers that the only way to get a favorable loan modification was by using the leverage they gained in a lawsuit).

    1. AZDavidPhx

      You know they must not have much to work with when the bulk of the posturing is over 350.00$ an hour “reasonable” attorney fees and fantasized headlines in the “presses”. It certainly reads like a bluff.

      It does seem silly that the NOD had no address listed but I would assume that the trustee will have proof that the bum was notified about his default one way or another. If the squatter refused to accept registered mail or whatever then oh well – i doubt a judge will sympathize with his plight when the trustee shows up with a stack of letters marked as refused. I highly doubt that it is going to fly if you make yourself unreachable and then file lawsuits saying you were not properly.

      It is pretty ridiculous that the moron has money to pay a lawyer 350.00 an hour but won’t pay his mortgage.

      1. alan

        “It is pretty ridiculous that the moron has money to pay a lawyer 350.00 an hour but won’t pay his mortgage”

        Ummm earth to Dave….

        The client is NOT paying $350/hr. The client paid a few grand one time for a retainer and the attorney earned his retainer by writing this letter. I doubt the attorney plans on getting any money out of his client. This is a shake down letter, he’s trying to get money from the bank.

        1. Honcho

          These aren’t one-time retainer fees. Attorneys are charging flat fees on a monthly basis. The attorney wins by dragging out the process, as does the client who gets to stay in the house for a longer period of time without making his mortgage payment and without fearing foreclosure.

          1. romeotybalt


            I am constantly innundated with calls from lawyers offering to litigate my foreclosure for 1500-3500 down and 500-730 per month. Yeah right.

            Yet, on has all the information needed to fight foreclosure from the notice of foreclosure, to appealing the order of possession, all for free.

            When 4 different attorneys called me, I explained why would I pay them to do something that I could do for Pro-Se for free?

            They quickly concluded that I would be a difficult client.

            Ultimatley, the goal for the client is to stall foreclosure, so if the client has a 3k monthly mortgage, these fees may seem like a great deal.

      2. Honcho

        The borrowers aren’t paying an hourly fee. The business models we saw had borrowers paying a monthly fee (typically around $1,500) to the attorney. I did not see any lawsuit that had any merit coming from these attorneys. Not one. The attorneys were just taking money from their clients with no hope of prevailing.

        Maybe this is what the borrower wants at the end of the day, just a little longer in the house at a reduced cost. However, I think a lot of these borrowers thought that their attorneys actually had legitimate claims that were being brought on their behalf. They didn’t realize that they could do just as well as the attorney for none of the cost (I actually saw a judge tell an attorney I was up against that his client (the borrower) was doing better when the borrower was in court without an attorney representing him).

    2. Scott

      I have to disagree with IR and the rest of the posters on this one. If the attorney’s letter is correct, and the bank did not follow the procedures required under Nevada law, then the foreclosure may have been improper and there are consequences.

      I am not sure why everyone is giving the bank a free pass for its trustee’s error. We are talking about transferring an asset worth a $100K or more, the bank should get it right.

      I wonder if the consensus here is merely passing judgment on who is more “wrong”. Would your opinion change if the debtor stopped paying, but had equity in the property? Or the debtor was serving overseas in the military?

      1. honcho

        In California, we have the Tender Rule that takes care of nonsnese like this claim. Even if there was a procedural defect, why should a court or the law set the foreclosure aside if the borrower cannot redeem the property. The borrower was not therefore harmed.

        Think of it as a “harmless error” in criminal law. If the criminal was found guilty and would be found guilty absent the error, why should the result be set aside?

        Why should a mere technicality be allowed to stop an otherwise lawful foreclosure?

        1. Scott

          The foreclosure should be set aside or the lender should pay damages to the debtor because that is (apparently) what Nevada law says.

          Everyone here seems to be arguing that Nevada law is wrong, and that the rules should have some sort of “right-ness” or fairness exception. Do you really want courts in that business? I don’t. I prefer certainty. If the bank doesn’t follow the rules, then they can be certain they have a problem if the debtor raises it, like here.

          1. Honcho

            Please tell me what you think the damages should be? How has the defaulted borrower been damaged if (taking the attorney’s word for it), there was a technical defect?

            Honestly, I would like to know what you think the damages should be?

            California has answered this question. It says that the borrower is not damaged in this situation, because the borrower would have lost the house regardless of the fact that there was a techincal defect.

          2. Honcho

            I’ll ask another way.

            If the “purpose” of the statute “is to afford the debtor an opportunity to cure the default” (the attorney’s words, not mine), why set aside the foreclosure based upon a technical defect if the borrower cannot, in fact, cure the default?

            And, if the borrower cannot cure the default, how has he been damaged if he loses the home? What money has he lost?

            The best this guy can hope for is for a court to require the trustee to renotice the foreclosure.

      2. tazman

        If the debtor was serving overseas in the military, the Soldiers and Sailors Act prevents any type of legal proceeding from moving forward until that member is back in the United States in a legal and physical location conducive to answering. A Pro Se letter with a copy of official orders to a creditor or court would stop this as well as free legal counsel provided by the military.

        1. Scott

          This may be true (I don’t know either way, as I have read about instances where service members overseas are foreclosed upon), but they would still need to have (proper) notice of the action.

          The lawyer here is saying that the foreclosure sale was not properly noticed.

  4. AZDavidPhx

    inviting you to relax in rooms of grand scale with unexpected intimacy.

    Woah, it almost reads like one of those steamy novels. I need a cold shower after reading that! Whew!

  5. Darin

    For some reason, I am constantly shocked that people think they can sell a home for more than 1M that has a garage door in the front elevation.

    1. .

      Why are you shocked? Go to redfin. Search for sold homes in Irvine with a price of over $1,000,000 and the result will be 289. Granted 25 of those will be custom or semi-custom estates in Shady Canyon that sold for over $3,000,000.

      Searching for homes that sold between $1-2 million in the past year in Orange County, redfin comes up with 1,962 results.

      Who’s delusional now?

      1. Darin

        It’s not the price tag. It’s the fact that they have a garage door as part of their front elevation AND they go for over 1M.

  6. John

    There was a major addition since the last sale; check out the 3-D photo on Redfin. They added 2700 square feet (there went the yard!) and the “hotel” finishes to what had been a standard tract home.

  7. Vincenzo

    Any information why the most expensive home sold last year in Irvine had a magical price of $5,777,777?

    I hope somebody will add a couple millions and buy it for a more magical price.

  8. toshi

    Personally, I wouldn’t want to live in a home that looks like a hotel lobby. I don’t think I can feel comfortable in a place like that.

    This place looks totally different on Google Maps. Did the owner mcmansionize it?

    1. octal77

      I live in the area and have driven by 2 Sunpeak
      for 10 years on a weekly basis.

      A few years ago the owners essentially stripped
      a pretty nice custom house down to the core
      and expanded it to this God awful monstrosity.

      House sits on the corner of Sunpeak and Hillcrest.
      Nearby Ridgeline and Hillcrest/Starcrest is one
      of the busiest intersections in Turtle Rock.

      Subject house front room stares down Hillcrest
      for marginal view. At night, approaching traffic
      headlights will flood living room.

      IMHO, this property is an eyesore. Why anyone
      would pay $3mm is beyond my comprehension. Even
      $1mm would be a stretch. Maybe someone can

    2. octal77

      checked my personal TR database.
      FWIW price has already dropped

      ORIGINAL LISTING – note ft/sq

      MLS# S479294 SFR priced at $1,870,000*
      2 SUNPEAK, Irvine, CA 92603
      Bedrooms: 4
      Bathrooms: 3
      Square Footage: 3,450
      Lot Size: 11,000 Sq. Ft.
      Year Built: 1986
      Stories: 2
      ZipRealty Rebate up to: $11,220**

      After expansion to McMansion status

      MLS# S634114 SFR priced at $3,175,000*
      2 SUNPEAK, Irvine, CA 92603
      Bedrooms: 5
      Bathrooms: 3 1/2
      Square Footage: 6,029
      Lot Size: 11,267 Sq. Ft.
      Year Built: 2010
      ZipRealty Rebate up to: $19,050**

      MLS# S634114 SFR priced at $3,075,000*
      2 SUNPEAK, Irvine, CA 92603
      Bedrooms: 5
      Bathrooms: 3 1/2
      Square Footage: 6,029
      Lot Size: 11,267 Sq. Ft.
      Year Built: 2010
      ZipRealty Rebate up to: $18,450**

      Price Reduced: 11/17/10 — $3,175,000 to $3,075,000

      1. toshi

        I agree. This place is totally ostentatious and seems out of place with the rest of the neighborhood.

        It’s interesting that the McMansionization somehow increased the lot size by a marginal amount. I wonder how that happened.

  9. Christine

    Aren’t places this expensive supposed to have at least one bathroom per bedroom and extra partial bathrooms for public areas?

    It seems odd to me that it doesn’t, especially since a designer of hotels made it. Interesting.

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