That’s the way it’s done here too. The problem arises, as noted above, when the mortgage subsequently gets sold and re-sold. Looking at the recorded mortgage may not tell you who currently owns it.
Florida seems to feel it had reached the point of willy nilly: “The new rule was approved in February with the intention of unclogging the foreclosure courts, which have an estimated statewide backlog of 500,000 cases.” and “Law firms handling the foreclosure overload, sometimes called foreclosure mills, have routinely filed a “lost note” claim with the original default notice, regardless of whether they looked for the note, said Miami-Dade Circuit Judge Jennifer Bailey.”
If folks were defaulting on their loans knowing they would get a free house then I would be upset. But it seems to me that they are defaulting without any expectation of gettinga free house. Sure it is like winning the lottery, but it hardly incentivizes bad behaviour, becuase the more likely scenario is that you default and you get foreclosed and you are SOL without a house a shitty credit rating.
Yes, Little Nemo, there have been a lot of foreclosures in Florida. An overwhelming number. But nothing in your quote suggests they are being filed frivolously, as you seemed to be thinking.
The “free house argument” is just not a large issue. The only times I’ve heard of it was when the mortgage company was so incometent and/or abusive that the discharge of the debt was the only legal recourse. What should be complained about (and I have in previous threads) is the benefit the fiscally irresponsible get in reduced mortgages so Alan Abbatior gets his $400K mortgage reduced to $200K because he can’t pay his bill but Betty Bouffant next door still pays her $400K mortgage because she wasn’t an idiot.
The Florida court system apparently felt they were being filed frivolously. And I have to say I can see their point - filing a suit accompanied by your admission that you lack the most basic evidence to support your claim seems to be a reasonable example of a frivolous lawsuit.
And it seems to have worked on filtering out these cases. Lawsuit submissions have dropped by 36% since the law was passed.
Whoa, how do people get reduced mortgages?
Probably by negotiation with the bank. They don’t really want your house, especially if the real estate market’s tanked. Ideally, you’d pay off the $400,000 you owe. But if they understand that’s not going to happen, they might decide getting $200,000 from you is better than getting a house that’s only worth $150,000.
I’m more reminded of the story of Hercules and the Lion:
Homer: Don’t you know the story of Hercules and the lion?
Bart: Is it a Bible story?
Homer: Yeah, probably. Anyway, once upon a time, there was a big mean lion who got a thorn in his paw. All the village people tried to pull it out, but nobody was strong enough! So they got Hercules, and Hercules used his mighty strength, and…bingo! Anyway, the moral is, the lion was so happy, he gave Hercules this big…thing…of riches.
Bart: How did a lion get rich?
Homer: It was the olden days!
No, the Florida Supreme Court was looking for a way to stem the tide of foreclosures…by adding a layer of red tape.
No, it’s an example of overworked lawyers and bankers looking for shortcuts.
Look, the idea that you originally expressed, of bankers deliberately launching foreclosures out of the blue on houses in which they had no reason to think they had any interest, is just ludicrous. Bankers don’t go driving through neighborhoods pointing at random houses in which they have no interest and saying “Oooohhh! That’s a nice one! Let’s foreclose on that one!”
Oh, really. Then how do you explain the judge in Florida who discovered two separate banks attempting to foreclose on the same house? Even better, the signer of the 2 separate sets of paperwork, was the same guy.
This may shock some, but there’s something known as fraud, and banks on occasion are party to it.
Furthermore, there have been rumblings in the banking industry for years now about irresponsible cost-cutting in the back office. If all this comes to bite them in the posterior now, it may prove to be a helpful teaching moment.
Having evidence is red tape?
That does sound pretty ludicrous. I’m sure glad I never said that.
It doesn’t even have to be fraud by the banks trying to foreclose. The assumed owner of the note may have been a victim of fraud themselves. You could have a situation where someone fraudulently assigns a single mortgage to multiple purchasers, who all think they own the note and have the right to demand payment on it.
This kind of stuff happens. Here’s a recent story from Florida involving forged real estate documents. I also recall a case from Ohio a few years ago where a lender sold the mortgages while continuing to service the loans, but failed to pass on the payments to the actual mortgage holders. The lender eventually absconded with the money literally in the middle of the night, leaving a locked office and a bunch of people several months delinquent on their loans.
Spoke, here’s a story that should make your blood boil. WaMu tried to foreclose on a guy who was unquestionably a deadbeat and submitted an affidavit which stated that they had tried to locate the note but couldn’t find it. Turns out that WaMu was routinely filing these affidavits with the court even though they weren’t actually attempting to find the notes. Now, notes can certainly get lost (FedEx might lose one during shipping, for example), but why would WaMu feel the need to routinely file these affidavits? Could it be that their record keeping was crap? I don’t believe they were able to find the note and ended up dismissing their suit.
A lot of good information in this thread. Another question: Can anyone point to an example of a single homeowner (with a cite) who ended up owning a “free house” because the note holder couldn’t produce it in court? Florida or any other U.S. State.
That doesn’t sound like fraud so much as corporate confusion. The same guy was director of both banks involved. Never ascribe to evil that which may be explained by incompetence.
That’s not going to be citable, because it doesn’t make the news. As described before, the house just goes into limbo, and if the bank doesn’t come up with the paperwork, the statute of limitations on the mortgage runs out. That can be many years later, and it isn’t going to make the papers when it silently happens.
you said this:
I was riffing on that…and it is ludicrous.
Of course it does. That’s fraud and wrongful foreclosure, and subjects the perpetrators to civil and criminal liability, as I noted earlier. The new Florida Supreme Court rule doesn’t prevent that sort of fraud.
It’s not fraud or wrongful foreclosure. What are you talking about?
How would using forged documents with with people signing as officers of multiple companies not fraud on the court?