We’ve heard of people being foreclosed on and during the proceedings the bank cannot produce the mortgage paperwork having sold it off. Everyone agrees that the person still owes on the house but since no one can figure out who they owe the money to, they in effect get a free house.
A friend is trying to get rid of a timeshare (and in that state it is a mortgage with a deed and everything) that made sense before she lost her job and moving. It went into collections but research shows it was sold i.e. the seller’s right, title and interest was granted, assigned and transfered to a company she has never heard from. The collection agency lists the timeshare company as the creditor and in the middle is some financial serice company that is either a payment center or mortgage company depending on who you talk to but either way has no paperwork and says they sent it on to the third-party collection agency.
Basically the mortgage chain is TS to X to ?
According to the timeshare/payment center/collection agency the chain of who I owe is TS to PC to CA to TS to … vicous circle and no one seems able to produce paperwork or make any mention of X.
So what does my friend have to do to get a free timeshare?
Before someone goes on about her screwing the system, she has no problems paying what she owes, but she does have a problem paying a collection agency double what she owes (yes it is marked up to twice the loan) when no one can even find the right paperwork.
IANAL - the concept of “getting it free” usually stems from the old “squatters’ rights”. You enjoy unencumbered access to a property for a certain time (10 years 20 years?) without objection from the alleged owner, then you are deemed to be the owner. (In some areas, like England, the same applies to ublic access - there’s the tradition that the owner blocks off public access at least once a year to assert ownership…)
Not sure how that applies in their case. Whether the deed implies the same applies to the timeshare? IANAL so does the registered mortgage also expire with disuse, ie. if you make no effort to collect to a mortgage registered with the land office, then in X years it expires?
This is why they have lawyers. They can tell your friend what happens if nobody harasses her for payment for X years.
The legal argument is based on an 1872 Supreme Court case, Carpenter v. Longan, 83 U.S. 271, 274:
Once the note was bundled into a mortgage security and sold, the trust deed becomes meaningless, and the bank originating the loan loses the authority to foreclose.
I am sure there are mitigating factors, but that is the gist of the argument.
I asked her to clarify what she wants. She doesn’t necessarily want a free timeshare but she is pretty sure the timeshare sold the mortgage and she does not want to pay double the debt because of collection costs to someone that doesn’t even hold the debt. She called the timeshare and they admit they don’t have the mortgage and probably did sold it so she wants to use the same strategy the “free house” people use and say, “If you can’t produce the note, you can’t collect.” to the collection agency. If the company that holds the mortgage shows up tomorrow to collect, she would gladly start paying them.
There’s no free house. If the mortgagee assigned the mortgage to a third party, it would not be bringing foreclosue proceedings. It accepted money from the assignee and has nothing further to do with the real estate. It is the assignee of the mortgagee, which now holds the note, notes, bonds, etc. who would bring the foreclosure action.
“Squatter’s rights” are based on adverse possession and is not relevant to the OP.
My brother-in-law is in somewhat the same position. No one seems to know who actually has the deed, although it’s definitely not the company that’s asking for payment.
If his situation is in any way typical, your friend will need to be foreclosed on, hire a lawyer and watch the case drag through the court system for a yet-to-be-determined length of time.
I don’t really get the legalities of it either, but here’s an article about how a couple got their house for one house payment due to a similar forclosure issue.
It’s not at all similar. In the cited case, the wife of the mortgagor did not sign the papers. That was gross negligence on the part of the mortgagee, which, incidentally, should have obtained a title policy on the mortgage. (If it had applied for the title policy, the title company would have picked that up, as the mortgagee should have.) Without the spouse’s signature, homestead rights are not waived, which means that since the house was the home, it could not be foreclosed.
That would have been the logical conclusion, but the appellate court went further. It said that the mortgage was void. I don’t think that would have been the conclusion in most states, but I don’t know the case law or the statutes involved in that state.