by: Peter J. Gallagher
A Texas man has moved into a $300,000 home in a "well-manicured" section of Flower Mound, Texas and it only cost him $16 to do so. As the Daily Mail recently reported ("Man Uses Obscure Law To Obtain Ownership Of $300K Home In Upscale Texas Town . . . for just $16"), the man took advantage of an "obscure" Texas law that permits residents to take ownership of abandoned homes through adverse possession. Although apparently not too popular with his new neighbors, the man is the envy of extreme couponers and bargain hunters everywhere.
As the article notes, the house was abandoned after being hit with a trifecta of mortgage crisis phenomena: (1) the mortgage company foreclosed upon the property; (2) the owners simply walked away from the mortgage and the property; and (3) the mortgage company went bust. Enter Kenneth Robinson. After doing "months of research," Robinson filled out some paperwork, paid the $16 filing fee, and moved his belongings into the home. Robinson is now seeking to take ownership in the home under a law that the paper described as follows:
Under the law, if someone moves into an abandoned home they have exclusive negotiating rights with the original owner.
If the owner wants them to leave, they have to pay off the mortgage debt on the home and the bank has to file a complicated lawsuit to get them evicted.
Mr Robinson believes that because of the cost required to move him out, he will be able to stay in the house. Under occupancy laws, if he remains there for three years he can ask the court for the title.
Staying three years may prove difficult though, as the home currently does not have any water or electricity. Nonetheless, Robinson appears undeterred.
Not surprisingly, the neighbors have not welcomed Robinson to the neighborhood with open arms. In fact, since moving in, Robinson has put up "No Trespassing" signs after his neighbors called the police to have him arrested for trespassing. However, according to the police, Robinson cannot be arrested or removed because home ownership is a civil matter. Judging by the comments from the neighbors, it does not appear that the matter will stay civil for much longer.
by: Peter J. Gallagher and Steven P. Gouin
Our regular followers know that many of our pieces focus on the foreclosure industry, and with good reason, as over 2 million American homes are currently in foreclosure. Add to this troubling statistic the recent allegations of shoddy paperwork at many of the nation's largest mortgage companies and the law firms representing them, and you have the makings of a compelling story of a giant foreclosure-induced catastrophe. While homeowners have been feeling the pain from this crisis for years now, the catastrophe struck close to home recently for many of the banks and mortgage companies at the heart of the foreclosure crisis.
In an article entitled “Confidential Federal Audits Accuse Five Biggest Mortgage Firms Of Defrauding Taxpayers,” the Huffington Post is reporting that a recent federal audit conducted by the Department of Housing and Urban Development (HUD) revealed that five of the nation's largest foreclosure firms, including industry giants like CitiBank and Bank of America, are guilty of fraud under the Federal False Claims Act. Specifically, the audit concluded that the banks “filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.” According to the article, federal prosecutors are debating whether to use the audits as the basis for criminal and civil sanctions against the mortgage companies.
At the same time, the New York Times is reporting that New York Attorney General Eric Schneiderman has requested information and documents from three major banks – Goldman Sachs, Bank of America, and Morgan Stanley – about their mortgage-backed securities operations (“NY State Investigates Banks’ Role In Financial Crisis”). This suggests that Mr. Schneiderman may be launching an investigation into the banks' practices, which many believe led to billions in mortgage losses. One of the most interesting aspects of the article is the suggestion that, by requesting this information from the banks, Mr. Schneiderman is “operating independently of peers from other states who are negotiating a broad settlement with large banks over foreclosure practices.” The article notes that Mr. Schneiderman has been unwilling to join this proposed settlement because the banks are demanding that it include a clause whereby regulators agree not to conduct additional investigations into the banks’ activities during the mortgage crisis.