Foreclosure-proof Homeowners

Jingle Mail?

Forget that! Its so 2007.

For 2008, let’s try a little reverse financial engineering: Squatting in $3 million dollar waterfront mansion in Florida and paying nothing. 

At least, that’s a new and growing problem we learn of via MW in South Florida. MW is a local developer, and claims this has become "very serious." (I have been able to independently verify this with a local resident, who tells me the local papers are filled with such tales).

He writes:

"There is a very important phenomena that is occurring
that has only been covered in an only "glancing" manner.

Beyond the concept of "jingle mail" — which suggests that
folks who can pay their mortgages may just choose to walk away given the
dramatic loss of equity due to housing’s collapse — consider the following:

As a developer, I had stepped to the sidelines and
rented beginning in 2005, because I was sure that housing was unsustainable and
was bound to collapse; it took 2 more years for it occur.

Nonetheless, as I have
followed several of the homes that my wife and I were interested in a few years
back, they are all on the market now. What is shocking, that in each and every
case, I have been told by brokers and banks that the owners, have ceased paying
their mortgages in some cases for nearly 2 years and have continued to occupy
these homes

Now, these are homes in excess of $2,000,000 in the
very best neighborhoods in South Florida. Brokers have added that these buyers
further complicated things by putting huge home equity lines on top of their
mortgages and now have no possibility of selling their homes for amounts needed
to cover their accumulated debt.

This may not seem like news, but understand
what this means: There is currently an 8-10 month wait to get a court date to
have a foreclosure filing heard in Dade and Broward counties. The bankers have
non-performing loans on their books to the best heeled borrowers in
multi-million dollar amounts with no immediate means for recovery; with a
non-secured second mortgage in place, there is no possibility for a "short sale"
that will satisfy all of the borrower’s debt. They are reluctant to take
a haircut knowing that they have the home equity debt still around their neck
and are likely to frustrate any near-term sale.

There is no clean way to sell
the home that would guarantee "clean title" hence a foreclosure is the only
means to separate the property from the dead-beat speculator/squattor.
Banks do not want to spend the $50,000 required to take
a home through a foreclosure and clear the title — only to put the house back on
the market for a deeper loss afterwards. Most likely, they have not revealed these owner occupied defaults to
their shareholders, thanks to the sheer numbers of non-performing loans on their balance
sheets, and the daunting task of foreclosing on all of them.

This is the ultimate seizure and full stop of the
market whereby everyone is standing in a stalemate. As one broker said to me,
"these bums sitting in $3,000,000 homes overlooking the water are likely to be
left alone by the banks for 2 years before the banks even get serious about

So here is the difference between "walking away," these folks are
doing anything but walking away, they are sitting on lounge chairs sipping
martinis living cost free
! (not to mention that they have ceased paying property
taxes and insurance).

I can only imagine what this market will look like in
the coming years . . ."

All I can say is wow. 

"MW" has been hearing this for the past six
months. He believes both the local and national lenders are in a state of
disbelief with no understanding on how to proceed.

If anyone has any local newspaper stories on this, please post in comments.

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What's been said:

Discussions found on the web:
  1. MarkTX commented on Mar 4

    Sipping martinis and feeding the kangaroos……

    what a novel idea…….

  2. Mike Nomad commented on Mar 4

    Stunning. Stupefying. I’m at a lost for words. Other than this article does a lot to further my longing for full-on Class War, along with my hatred of the “rich.”

  3. KirkH commented on Mar 4

    This is going to be an amazing story in the NYTimes next month!

    Seriously though, if word of this gets out we’re going to have a nuclear summer. The mortgage on a $2m house is something like $10k a month. If you can get away with not paying for two years that’s a quarter million dollars you get to keep in exchange for bad credit. But if you have money then you may not need credit.

    I’m picturing rich people walking away from their checkbooks and using the cash to add furniture to their rent free mansions.

  4. Jay commented on Mar 4

    Whoa, very interesting. When confronted like a problem like this, or even much smaller than this, lobbyists usually went around doling out cash to state legislators to find a way out. Look for behind the scenes lobbying to pass draconian laws to facilitate quick foreclosures, some sort of summary judgment and County Sheriff court order in-a-day type legislation. The problem is getting any politician in their right mind behind such a thing. Maybe they’d go to some sort of state regulatory commission so that three members on a board of five could take the heat for six months while they evict thousands of people, then retire in style courtesy of the banking lobby. Then of course a voting regulatory commission could contest the evictees’ new voter applications once they found a place to live! Ah, Florida.

  5. larster commented on Mar 4

    Another little piece to the puzzle and proof of why BB was telling the bankers to lower the loan values today in a speech to said bozos. I am afraid that taht solution will not touch the squatters in this article. It looks like we are going from a moral hazard to a moral neutron bomb.

  6. SINGER commented on Mar 4

    I second that WOW!!!

  7. Bob_in_MA commented on Mar 4

    Sounds like the making of a great Bette Middler comedy!

    Better yet, a reality TV show! Who knows how long a run it will have?

  8. ramster commented on Mar 4

    It may spice up the story by using $2 million waterfront homes in Miami but presumably the occupant of a double-wide in Podunk could do the same damn thing.

  9. wnsrfr commented on Mar 4

    Even Abbie Hoffman wouldn’t have thought of this one…

  10. MarkTX commented on Mar 4

    Drink martinis till you jam the market in the last hour,

    It is that easy……

  11. Ed Miller commented on Mar 4

    So now the very rich are the worst deadbeats. Absolutely fascinating.

  12. karen commented on Mar 4

    OT (sorry):

    Marketwatch/cnbc is reporting yet another ambac bailout! in case you were wondering what turned the indices around…

    seriously, i’m just sitting on my hands. and if 1320 holds by week end, i’ll eat them. :)

  13. Mike M commented on Mar 4

    And to think here I am saving my money to buy. In America, a person who saves their money and lives within his means is a sucker.

  14. MOB commented on Mar 4

    MarkTX wrote: “So now the rich are the worst deadbeats”

    Now? Where have you been all these years?

  15. Jack Stevison commented on Mar 4

    Not in newspapers yet (I live in Central Florida) but have already heard the term for it, “Abando.”

  16. grace commented on Mar 4

    “So now the rich are the worst deadbeats”

    What makes you think these people are rich? With no money down and no payments you don’t need to be rich to lounge in a $3M house.

  17. Stuart commented on Mar 4

    …..and the taxpayer is going to be the bagholder.

  18. bluestatedon commented on Mar 4

    Just on basic principles, I say evict these bums, sell all their furniture, cars, furs, jewelry, etc., and give ’em one-way bus fare to the nearest homeless shelter. I realize it still leaves the question of what to do with the property, but it’s an affront to nature that these losers get to live for free while millions of Americans in Podunk and elsewhere are trying honestly to make ends meet.

  19. Tony Shifflett commented on Mar 4

    Karen, I couldn’t agree more. It isn’t paying to try to do things right.

    I do know for a fact that this is also happening in Myrtle Beach, SC. My Mother lives in a well-heeled development, and one of her neighbors told her that she and her husband are doing this. Just squatting in a million dollar home.

    Bank hasn’t approached them. Yet. They’ve not paid a cent in over a year.

  20. Camille commented on Mar 4

    Maybe we should move homeless people into these homes. When the deadbeats call the cops, ask to see proof that they are indeed the mortgage holders and not squatters themselves.

  21. Dude commented on Mar 4

    It looks like we’ve come full circle. During the great depression banks were able to “call” loans and foreclose on property instantly and “draconian” laws were passed to prevent banks from doing so now we are considering passing “draconian” laws to allow banks to foreclose on squatters much quicker.

    My only regret is that I didn’t buy a 2 million dollar home in Florida where I could have been living it up for 4 or 5 years with no worries of being evicted :(

  22. Hazel M. commented on Mar 4

    I echo the sentiment of how revolting this seems in the face of millions attempting to keep their homes in an honest way.

    But I can’t see any downside to forcing banks or any kind of organization to prove they own the note. The fact that we “know” they own the note doesn’t make any difference. We all know a lot of things in life that when brought before a judge then must be supported by proof.

  23. Bob A commented on Mar 4

    You can file bankruptcy in Florida and still keep your home no matter what the value. Scumbags from all over the country have been fleeing there for years to protect their assets. I’m thinking that even after foreclosure they get to keep the equity they took in.

  24. bex commented on Mar 4

    rich deadbeats are probably better neighbors than squatters…

    Sure, both bring down values of the neighborhood, but rich squatters won’t spray paint graffiti everywhere.

  25. Thinkboutit commented on Mar 4

    Either the rich cheat the system like these squatting deadbeats or the poor leach off the system like every single Obama supporter can’t wait to do with their ‘free’ entitlements.
    Doesn’t matter- in the end, it’s always the middle class that takes it up the poopshoot.

  26. Street Creds commented on Mar 4

    Their neighbors should rent a mototcycle gang for a week or so. Slip the cops a few bucks, and that should motivate them to leave. Hell I might start a gang just to disposses them as a business. Who are they going to complain too? Then we move on the the next house. Simple, wash, rinse, and repeat. And, no mufflers.

  27. Westparker commented on Mar 4

    These guys have nothing to worry about. They won’t be underwater once Ben gets his way.

    “Fed Chairman Bernanke today called for lenders to reduce principal on homeowners with negative equity. He also noted that for properties foreclosed in the fourth quarter, the estimated total losses exceeded 50% percent of the principal balance. Bernanke argued this gives lenders significant incentive to avoid foreclosure and write-down principal.”

  28. Estragon commented on Mar 4

    It may even be worse than it seems. A year or two of arrears would put it back to just about the top of the market. Some of these deals were probably cash-back on close type of scams. On multi-million $ properties, the cash-back could probably be huge and still not be red-flagged back then.

    In essence, some of these folks may not only be getting a year or two of rent free squatting, but may be able to keep up the Mercedes payment on interest from the cash-back!

  29. E commented on Mar 4

    Other things I’ve read in emails recently – Obama is a radical muslim, McCain is not a natural born citizen, and I’ve won $10 million dollars in some Nigerian lottery.

    Caveat emptor on the sensational emails, folks.

  30. Marcus Aurelius commented on Mar 4

    Either the rich cheat the system like these squatting deadbeats or the poor leach off the system like every single Obama supporter can’t wait to do with their ‘free’ entitlements.
    Doesn’t matter- in the end, it’s always the middle class that takes it up the poopshoot.

    Posted by: Thinkboutit | Mar 4, 2008 4:18:01 PM


    Obama supporters and free entitlements? What the hell are you on about? I don’t hear any Obama supporters calling for free entitlements. Unless, of course, you are referring to the quaint idea that we are entitled to a Constitutional government.

    Your comment begs question, exactly who was “freely entitled” to all of the cash looted from our treasury during the past 8 years? I’ll bet you didn’t get any. I don’t know about you, but I’d rather my taxes fully fund a welfare queen than pay one penny to a bloated corporate executive.

    BTW, thanks to the Bush debacle of a Presidency, the middle class is becoming the lower class. Of course you’re “taking it up the poopshoot”. That’s what you voted for.

  31. rob commented on Mar 4

    $50,000 to foreclose and clear title?

    I am in the wrong branch of the practice of law … why can’t that be done for under $5,000???

  32. Roger Bigod commented on Mar 4

    This makes the youwalkaway folks look like straight-arrow traditional value Puritans. It’s Marxism for the rich (to each according to his needs, dude).

  33. Paul in NYC commented on Mar 4

    I was only wondering when this would start happening. The ‘value’ of anything is always only what someone is actually willing to pay- not what someone claims it is. If people are not willing to pay, there is no more value.

    I have to laugh at “these bums are sitting in $3,000,000 homes”. Oh boo freaking hoo.
    Did it ever occur to this guy that maybe, just maybe they aren’t worth 3 mill?

  34. Michael Donnelly commented on Mar 4

    Reminds me of the old story. If you owe the bank $10,000 and you can’t pay you are in trouble.

    If you owe the bank $10,000,000 and can’t pay the bank is in trouble.

  35. sergtat commented on Mar 4

    It could be done to any property not only to a multi million dollar ones. Every one can do it, not only rich folks you are spitting about. And I suggest you do it too, greedy and stupid bunkers and mortgage brokers well deserve it .

  36. Fred C Dobbs commented on Mar 4

    This is not new, and is expected. My Mother tells me that, in the ’30s, in The Depression, most of the people in her neighborhood paid nothing to live in their homes, except utilities. When they lost ownership through foreclosure, they just stayed, with the bank’s blessing, because, by living there, the bank’s security was better protected than if they left. If they did leave, the bank incurred the increased cost of insuring an unoccupied building, the cost of boarding it up, and producing a general decline in local property values, including its own properties nearby.

  37. Pat G. commented on Mar 4

    “In America, a person who saves their money and lives within his means is a sucker.”

    Perhaps..and money can’t buy you morals or ideals. Lack of it however can make you subservient to both. It’s about dignity.

  38. Cal commented on Mar 4

    In California the lender has the option of a non-judicial foreclosure, called a trustee sale. Much faster and cheaper.

    I just think the servicers are swamped and not able to process everything fast enough. And I dont think that it helps that one of the biggest servicers, Countrywide, is on such poor financial footing.

  39. Camille commented on Mar 4

    Serous question:

    Have we completely lost our ability to accurately assess risk in this country? In all forms?

    Once homeowners realize that they can simply stop paying and live rent-free for a few years, I can envision many, many more homeowners doing the same. The cost will be A) bankrupt banks and B) lending tightening to absurd levels and C) general Mad Max-style neighborhood lawlessness. Who’s your pick to run Bartertown? Ben Bernanke and Greenspan?

  40. STS commented on Mar 4

    This sounds suspiciously like an urban legend — one which appeals to bankers eager to play up the “predatory borrower” angle.

    Of course, the world is full of brazen jerks, so maybe somebody, somewhere really *is* relaxing poolside with a martini in hand by a house they no longer make payments on. But it’s just as likely they are in a drink-addled panic over finding a new source of income to match the real-estate brokerage gravy train they’ve just lost. Count your blessings …

  41. Roger Bigod commented on Mar 4

    Perhaps the banks are protected as long as they don’t foreclose. If they sold the income stream on the mortgage to be split up into derivatives, some insurance could have been thrown in along the way. So maybe the inhabitants of the houses are achieving their dream courtesy of the friendly folks at Ambac.

  42. Paul in NYC commented on Mar 4

    Hey Camille, just so long as as the Hoovervilles are known as “Bushville”. And remember what Maggie Thatcher said after some especially nasty riots in Britain in the mid 80’s- “The veneer of civilization is very thin indeed”.
    I’m just thankful the smoke and mirrors are being exposed before Bush heads back to permanent brush clearing duty in Crawford.

  43. zot23 commented on Mar 4

    And yet no mention of reforming the banking/lending system so this crap would be impossible. I don’t begrudge these people doing this, I doubt many of them bought these houses intending to do this. I don’t like it, but in their situation facing possibly no job and utter bankruptcy, I might do what I could to keep my family sheltered for another year. Sipping martinis is a gross generalization, for all we know life for them is a living hell of borrowed time. I know, boo-frickin’-hoo. But still, let’s not extend our assumptions too far here.

    Again though, shouldn’t we be having massive congressional hearings about lending and making sure this sort of thing doesn’t happen again? Isn’t that the prudent response? Passing draconian laws is a huge double-edged sword; expediting kicking rich bums quickly becomes insta-foreclosures on entire poor neighborhoods tomorrow. Laws can be gamed both ways and most banks I know employ a couple of lawyers ;)

    Come on, this country needs to get its financial crap together and quit looking for quick fixes. This correction will be deep and painful (regardless of stimulous), but what will we do differently coming out the other side? The time for that arguement is now, no one questions the system in the good times.

  44. ScrewBush commented on Mar 4

    “like every single Obama supporter can’t wait to do with their ‘free’ entitlements. ”

    WTF !!!

    Thinkboutit, you really need some help. Do you know what free entitlements I would like? Probably not, but as you’ve already guessed I’m about to you:

    1. I want my 25 yr old National Guard nephew to someday become my 26 yr old nephew by not dying in Iraq.

    2. I would like a Vice President who abstains from shooting people in the face while drunk and who understands that he’s in the Executive branch of government.

    3. I’d like the CDC, NASA, FDA, CPSC, and other science based entities in our government to not have to filter scientific observations and warnings through a political handler of the Clown-in-Chief.

    4. I’d really like to have an adult in charge who would not shred our Constitution because 19 or so Saudi’s took a shot at us while a bunch of total idiots were on watch.

    5. And, I’d like a President who didn’t make Nixon look like the most honest guy to ever hold the office.

    Is that really too much to ask from a President or government?

  45. lux commented on Mar 4

    All I can say is, Holy Crap.

    Sometime I really feel like a sucker for playing by the rules.

  46. Street Creds commented on Mar 4

    Oh shit, I bought more calls on DBA today, and tonight Cramer said to buy commodities on a drop. I’m doomed. I feel so dirty, I’m going to shower now.

  47. TheSkyisFalling commented on Mar 4

    I think hating the rich makes as much sense as hating the poor. It is pretty judgemental in most cases.

    My guess is the martini is to calm their nerves about what they are going to do when they become homeless.

    I am a realtor and sell homes to people in the millions. They are hard working individuals who contribute to the community in most cases. I know of many that are facing hard times now…especially business owners who are now bankrupt.

    This story simply told us all that the rich are NOT imune during this economic crises.

    In my opinion…we are in a recession and heading for a depression. Reality cannot be avoided no matter what the “PRIVATE BANKERS” that control the Federal Reserve money supply say.

    I used to make a lot of money and now I have spent all my savings, sold all my stocks, cashed out my 401K, and am currently living on my HELOC (Which won’t last much longer). Can’t find a job that pays well enough to support my home, and I owe more on my car than its worth. Should have seen this coming but didn’t.

    Yeah, I know….boo hoo for me.

  48. larster commented on Mar 4

    Kudos to zot23 for hitting on the real issue- what are we going to do on the other side. The Dick Cheney, the defacto president, says let the markets work. Well, guess what, they didn’t. My crystal ball is telling me that the BC administration (before competence) will try to kick the can down the road till jan 09 just like Iraq, etc. I do not see any meaningful dialogue on how we prevent this in the future and until this happens we will spiral down into the abyss.

  49. Dave commented on Mar 4

    Why walk away when you can live for free? And to all those who say evict the deadbeats, uhm…you can’t, not until the bank forecloses. The Property is owned, by the buyer/squatter. The banks just have a lien.

    It’s going to get real brutal for the banks. No income from the loans AND paying for taxes and insurance….Damn that has got to hurt!

  50. TheSkyisFalling commented on Mar 4

    Obama is just as bought and paid for as the rest of the candidates.

    Its a lot of really good acting. Tell the people you will give them whatever they want. Then once in office… the Federal Reserve (private bankers) will continue to run our country into the ground. They don’t care…they are positioned well in the world market and are in it with all the other central banks.

  51. ef commented on Mar 4

    A sort of moral hazard. The messages: Disney World is not the only fantasy land in Florida. If you are going to be a bum, it is better to be a bum in a $2 million house on the waterfront. If you are going to play, play big, because they can’t afford to touch you (We have laws, but who can afford them. 50k/house!). Ho hum. I suppose their kids are attending the schools, presumably nice/modern schools, in this $2 million neighborhood. Wonder if this is one of those things they teach in those late night realestate infomercials. It seems like Florida is also one of those states, all the shady businesses go to, and if you go bankrupt your mega-multi-million dollar estate is safe, oh, and they can’t hold honest elections either, or maybe they just can’t count – money or votes. Boy, it still seems like we have an Enron-economy.

    Troubled MBIA Still Gives Execs 60 Percent Bonuses – They sure know how to take care of themselves.

  52. dubious commented on Mar 4

    What happened to consequences?

  53. wunsacon commented on Mar 4

    >> My guess is the martini is to calm their nerves about what they are going to do when they become homeless.

    Homeless? Foreclosure for these people means “living in an apartment”. Not “homeless”.

  54. ef commented on Mar 4

    The entry above regarding “Joe Lent who hasn’t paid on his mortgage since 2002″ is interesting. The problem is they lost the paperwork. During all the financial repackaging derivative shenanigans, “Regulators appear to have ignored this” (i.e., the paperwork, as in, who owns the property)

    …Subsequent efforts to foreclose have stalled because no one has produced the paperwork.

    “If you’re going to take my house away from me, you better own the note,” said Lents, 63, the former chief executive officer of a now-defunct voice recognition software company.

    Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven’t been able to prove they own the mortgages. The confusion is another headache for U.S. Treasury Secretary Henry Paulson as he revises rules for packaging mortgages into securities.

    “I think it’s going to become pretty hairy,” said Josh Rosner, managing director at the New York-based investment research firm Graham Fisher & Co. “Regulators appear to have ignored this, given the size and scope of the problem.”

  55. john galt commented on Mar 4

    And zot23 at 5:43PM wins the commenting contest. It was refreshing to get a post that wasn’t someone’s furious envy/anger at the rich, the poor, and/or the bankers. Thanks.

  56. Darkness commented on Mar 4

    >To Theskyisfalling,

    I have an honest question for you. At what point did you decide to throw it ALL away by dipping into the 401k? This kind of things startles the crap out of me. That money is protected in a bankruptcy so why not hold onto that firewall? Were you unaware of that, or were you just being insanely honest-minded about paying your bills?

    The banks really made out on this scheme (up to a point) with these HELOCs. They got people with racked up credit card bills to dip into protected equity on the house to stay afloat. Please, people, before you dip into your house or your 401k (both of which are firewalled against bankruptcy, depending on your state…) to pay off a usury credit card…. take all your cc invoices and add up how much you paid in interest. You will probably discover that you’ve already paid off the credit card company, more than one time over. Scrape $600 together, call the sleaziest bankruptcy lawyer you can find and hold onto your future. Cripes.

    And I’m one of those insanely honest people who is not in debt saying this.

  57. TheSkyisFalling commented on Mar 4

    >> My guess is the martini is to calm their nerves about what they are going to do when they become homeless.

    Homeless? Foreclosure for these people means “living in an apartment”. Not “homeless”.

    Well…think back on the depression. Fat cat wallstreeters jumped out the window rather than face renting a room and working at Arby’s.

    I come from the capital markets. My industry is done. I can’t get a job like I had (Operations Manager at a major mortgage conduit). Then I sold real estate to upper bracket clients. Its over for me.

    I am not sipping martinis thinking I’ve got it made because they haven’t kicked me out of my home yet. I’m applying for a job as a receptionist and considering that I can’t afford my car AND a one bedroom apartment at that pay scale. Its all i can find right now though.

    Don’t be so harsh on the wealthy.

  58. BigT commented on Mar 4

    “they are sitting on lounge chairs sipping martinis living cost free! (not to mention that they have ceased paying property taxes and insurance).”

    I don’t think so. The bank may not foreclose due to the numerous reasons listed in the article and the comments but the county will.
    They don’t care what the house is worth, they’ll auction it off for back taxes.

  59. TheSkyisFalling commented on Mar 4

    To Darkness…

    I am avoiding bankruptcy. I just can’t do that. I have started a new business that I think I can make enough to cover my enourmous overhead. Its my last hurrah. But I needed income while I build it.

    I am applying for a silly evening job as a receptionist to stop the hemorrhage of money.

    When did I realize I was in trouble…. A year ago at least, but still kept praying something in real estate would come through. IT DIDN’T.

    If my new business doesn’t make it… I am toast. I will end up in foreclosure and ruin my credit. I will be in an efficiency apartment at best. TOTAL lifestyle change.

    Give me a martini! lol… I don’t drink martini’s.

  60. Winston Munn commented on Mar 4

    Ow. That’s going to leave a mark.

  61. Joe commented on Mar 4

    Maybe the banks can’t be bothered to efficiently foreclose. But if property taxes are not being paid, it won’t be long before localities/counties/states move in for swift recovery of back property taxes to recover part of their dwindling revenue.

  62. Mr Peabody commented on Mar 4

    My friends were renting a realy nice condo in mid town Manhattan. It was owned by some Korean drug lords and they skipped town. They stopped paying them rent and lived rent free in the condo for about 2 years until the bank threw them out. I think there rent was $6500 a month.

    More I hear from bankers that folks are sending in keys when they are only 30 days late as they are so far under water in thier homes.

  63. bobn commented on Mar 4

    I’m wondering if the reason people go months w/o paying and get no default notices isn’t that the banks pretend these folks are not defaulting so they don’t have to write down the loans as non-performing assets.

  64. Darkness commented on Mar 4

    >Theskyisfalling: Well…think back on the depression. Fat cat wallstreeters jumped out the window rather than face renting a room and working at Arby’s.

    Back in the 30’s, renting at the low end was not what it is now. Our current low end is closer to their high-middle. You know: Indoor plumbing and not having to go to the courtyard of the apartment to pump your own water. Some didn’t even have heat back then, even in NYC. Going from servants to that kind of living would have been a leap. So, they chose a different leap.

    As to your response to my direct Q (and thanks for that, I feel voyeuristic asking, but you did volunteer part of your situation) is your resistance to bankruptcy just the stigma, some ingrained by your upbringing issue, or is it just the giving in you can’t bear? I probably would have done the same years ago except a few very good friends went through it, and now we get to ride them about keeping their finances in order. It’s like having a friend with diabetes in some ways… steering them away from the sugar, financially speaking.

    Good luck with everything, whatever the case. From my quiet shops-at-goodwill because I’m cheap as heck existence I can’t offer you much identification with where you are coming from. But, I do wonder if there isn’t an opening for someone with your experience in the cleaning-up-this-mess industry. You know, a law firm needing expertise in the area…?

  65. TheSkyisFalling commented on Mar 4

    To Bobn…

    Everyone I worked with is history. There are many thousands looking for good jobs that lost there jobs in my industry. (Citibank – expecting a 37,000 people layoff, and Merril Lynch a 15% reduction in employees). A law firm needing expertise is a nice suggestion. But…when they receive literally hundreds of resumes…it almost comes down to who you know.

    NO…its not the stigma of bankruptcy. I do NOT want to default on my obligations. It seems like stealing to me. Lots of guilt I guess. Crazy honest? I’m a Christian so its not about working the system, its about truth, honor and being a person of my word.

    I am a regular at walmart now and likely will make the rounds at goodwill (I hear they have some pretty good deals).

    Thanks for the well wishes. Its going to be a bumpy ride!

  66. Francois commented on Mar 4

    “not to mention that they have ceased paying property taxes and insurance.”

    WTF? That a bank doesn’t want to go through the hassle of foreclosing on top of taking a big loss is one thing. But that the town does not EVICT those asshats for failure to pay their taxes is another matter entirely.

    What gives here? What is the status of a municipality as a creditor versus the bank? I must be missing something here…as usual. (sigh!)

  67. Good American commented on Mar 4

    Welcome to the Bush economy.

    The Middle Class is toast. The upper end gets richer, and the lower levels never had a chance.

  68. Ernst commented on Mar 4

    Don’t blame the people not paying and staying; blame the banks and lending institutions for being totally screwed up and causing the decline in home sales and home prices. How about the lower priced homes they are not acting on as well. The banks caused the housing problems and the banks perpetuating the problem by not acting on short sales and demanding prices which make buyers back out or cancel the contract because it takes too long to get an answer. I am a real estate agent and it takes 4 months or more to get an answer and close a deal and buyer are backing out and the home eventfully is sold at a lower price or foreclosed later one. Short sales are competing with REO and are loosing out because the lenders are cutting the prices on REO’s but want to get a high price on short sales because they have certain discount standards which are out of whack with reality. There needs to be an accelerated short sale process so prices do not drop even further by delayed reaction from the loss mitigation departments. I truly believe they are holding back to not show so many losses on their balance sheet. Chances are that any home in the $1m plus range is 40% overvalued and even if you have an offer it will not meet in the 20 to 30% short sale price discount formula and there’s the problem. Home sales nationally would increase and prices would stabilize if the banks would just act faster on short sale decisions and the market would recover faster. Processing short sales for a real estate agent is utterly frustrating, clogged by BUREAUCRACY , answering machines full, loosing paperwork, re-faxing and re-faxing and endlessly dealing with people who are overworked and incompetent and the whole system needs a big enema.

  69. AC commented on Mar 4

    No worries people. Before you know it Hurricane Season will be upon us, yumyum.

  70. twenty-niner commented on Mar 4

    Good American,

    It’s not a Bush economy; it’s a Greenspan economy. It’s an economy that has become addicted to cheap credit and asset inflation as a means of growth instead of innovation. While we should’ve been working hard on the next generation of technologies, we were busy installing granite countertops, buying Chinese crap, and flipping fireworks stands.

    America needs a recession badly to put and end to the Wall Street Ponzi finance machine, clean out unproductive excesses, and pop the latest asset bubble, the CRB.

  71. ef commented on Mar 4

    Perhaps realestate agents are also part of the problem, colluding with home inspectors, and artificially creating higher home prices. Getting their 6%, no matter what they do. During the bubble when we wanted to downsize, and we kept asking about these outrageous pricing, they were all smiles, saying if you don’t buy it now, it won’t be here tomorrow. They use aggressive sales tactics, creating urgency. They make a house sound like a palace, when in reality it is a fixer-upper. Use, buyer and sellers be honest with one another, and get rid of the unnecessary middlemen and save yourself some money in the process.

  72. ef commented on Mar 4

    Regarding innovation and leadership. Comedians were having a field day with the International winners of the Academy Awards in the top acting categories. Didn’t surprise. We watch mostly BBC news, theater, and comedy shows because of the better writing. What I think is a more interesting trend is the winners of the ACM annual award for the last 10 years, and the longer term trend.

    Interesting article about the relationship between security and economics. If we don’t have a solid economic foundation, aren’t we really setting ourselves up for a less secure environment all around.

  73. Omri commented on Mar 4

    75 comments, and nothing about people doing this outside of Florida.

    I find that reassuring. Good luck to Theskyisfalling

  74. Shane commented on Mar 4

    Yes I believe that one of the biggest problems is the continued fall-out if this thing doesn’t turn around soon (which I don’t think it will). We will see more and more stories of people who are having a complete change of lifestyle.

    One of the bigger problems we have in this country is the lack of preparation. Everyone believes “it won’t happen to me”. We’ve had it so good, for almost 20 years (’91-08), with a minor (6 months) bump. Everyone believe the stock market will always go up (they forget the 60s-70s), housing will always go up (forget early 80s, 89-91), the economy will always be great, and the US will always be #1. The bill will always be due later.

    So when hard times inevitably come, very few are prepared. I personally believe if you aren’t saving 10% of your take-home you’ve got to rearrange somethings. And I do mean save (low risk, CDs, cash, gold). As most are finding out, stock markets are not always up.

    Always live below your means to eventually live well.
    Save while times are good to live well while times are bad.

    With that in mind, after only being out of college 3 years, married, child due in May, above average job, I have enough financial security for 2 years (i.e. if I lost my job tomorrow, my family would do just fine for 2 years with no change in standard of living-not that we live great, but we don’t lack for anything we truly need).

    Everyone’s situation is different, but the vast majority of people don’t live within their means. And yes cutting out the 5 dollar lattes and dinners out (or whatever they are, I don’t drink coffee, so I have no clue) does make a difference.

  75. campbeln commented on Mar 5

    I don’t have the link off hand, but I read a story from I believe the SF Conical or Gate where the writer was shocked that many individuals he talked to regarding their foreclosures hadn’t made payments in 7 months or more without even a NOD. Also there was another article out of SF that was a revisit 6 months later on 4 individuals they looked at regarding there adjusting mortgages and one of them hadn’t paid nor received a NOD in 6-8 months of non-payment. I’ll see if I can dig them up (the first story was on and post the URLs later… but I think the urban myth theory is throughly debunked for me at least!


  76. engineer al commented on Mar 5

    Here in the semi-rural midwest, my neighbors used to be bovine. In the last ten years, the bovine have moved on and grand McMansions sprouted in their place.

    Over the last 12 months, suddenly a rash of “for sale” signs have also sprouted in the neighborhood. We had real estate auctions last winter for a couple of the slow to move properties and no one around here EVER auctions real estate. You’d be surprised how quickly a McMansion can start to look ratty once it’s vacated and the bank takes over.

    The local mfg jobs have moved overseas. The local large telecom is shedding jobs. Our city and county government is suddenly strapped for cash. Strangely, we now have a brand new 24hr WalMart SuperCenter but no, I never go near it.

    I’m glad to hear the Palm Beach millionaires still have a place to call home, years after they stopped making payments on their seaside mansions. I hope they didn’t have to let any of their “help” go.

  77. Ritchie commented on Mar 5

    zot23: “Again though, shouldn’t we be having massive congressional hearings about lending and making sure this sort of thing doesn’t happen again?”

    WHAT! And interrupt the Roger Clemens hearings/investigation?

  78. Paul in NYC commented on Mar 5

    Actually, it is a Bush economy, since the Bush tax cuts put obscene amounts of money into the hands of the people who pushed all this real estate development. We’ve just been through a hyper-accelerated real estate cycle that was exacerbated by Bush’s economic policy. No restraint- none whatsoever. Everybody’s a millionaire- or is it now billionaire? Yep Hoover is looking like a fair parallel.

  79. Ritchie commented on Mar 5

    ScrewBush: “4. I’d really like to have an adult in charge who would not shred our Constitution because 19 or so Saudi’s took a shot at us while a bunch of total idiots were on watch.”

    Of the hijackers, 15 were from Saudi Arabia, 3 were from the United Arab Emirates, and 1 was from Egypt:

  80. Ritchie commented on Mar 5

    dubious: “What happened to consequences?”

    A large part of the electorate, and the Supreme Court, voted to invalidate that concept.

    Remember that silly “lockbox” idea of Al Gore’s? But the opposite.

  81. Ritchie commented on Mar 5

    TheSkyisFalling: “Well…think back on the depression. Fat cat wallstreeters jumped out the window rather than face renting a room and working at Arby’s.”

    No, there were no jumpers:

    Arby’s was incorporated in 1964.

  82. toby commented on Mar 5

    donald trump did the same thing the banks could not let him go under they kept him floating but this will bring down usa as we know it so sad for our kids remember them?

  83. Chief Tomahawk commented on Mar 5

    “75 comments, and nothing about people doing this outside of Florida.”

    Omri, did you read the story I posted the url for in the 3rd post on this thread?

    Here’s a section of it:

    “Judges Helping ‘The Little Guy’

    Judges are becoming increasingly impatient with plaintiffs who produce no more proof of ownership than a lost-note affidavit, said Michael Doan, an attorney at Doan Law Firm LLP in Carlsbad, Calif.

    Federal District Judge Christopher Boyko dismissed 14 foreclosure cases in Cleveland in November because of the inability of the trustee and the servicer to prove ownership of the mortgages.

    Similar cases were dismissed during the past year by judges in California, Massachusetts, Kansas and New York.”

  84. android commented on Mar 5

    anyone who believes this post should purchase the bridge i have for sale….no bank or lender will allow this to happen. always think, if you were a lender, would you let someone borrow money and not force them to pay it back? this is sensational print and feeds on the frenzy of bad news…people in 2 million dollar homes have other assets to be attached…nonsense!

  85. Mr. Gspan commented on Mar 5

    There are 3 main reasons for the current mess.

    1 The Fed lowered rates too low that started the process
    2 Wizards on Wall Street created a way to pass mortgage risk to institutions
    3 Regulators did not see that Wall Street pulled a fast one.

    This mess will continue for years to come. Wall Street’s aim was to bury the risk and they’ve done such a great job that nobody knows who owns what and how much exposure anyone has to the mess.

    Expect housing prices to decline for the next 2-3 years. Of course ‘Helicopter Ben’ will try to come to the rescue to inflate the debt away…but will it really work this time?

    Just follow the price of gold and the dollar to find out how much success he has…stay tuned!

  86. MW commented on Mar 5


    You couldn’t be more wrong. Perhaps you should take a hard look at a chronology of sales transactions over the last 5 years on a few of these homes in South Florida. Have a lawyer run a lien search and examine the existing loans on the property and call the lenders. Take a moment to figure out the current “mark to market” value of the house and then discount it again for sheer over-supply and then adjust for future declines in the market. This is happening I assure you. To dismiss it out of ignorance will only come back to bite you later. Never trust what you think is truth too much, you might find out that you were wrong.

    As for the comments regarding foreclosure by the municipalities for default property taxes, you are correct. Only the process to foreclose by virtue of a tax certificate is a multi-year event. This doesn’t happen overnight. Moreover, the municipalities are dealing with thousands of default property tax cases.

    It may very well be that if and when the municipalities begin to take action, the Lenders will assert their lien rights and satisfy the tax liens and foreclose. If you think this will happen quickly, you are no doubt also a believer in the Easter Bunny.

  87. RealEscape commented on Mar 5

    I’m a Real Estate Broker who could not find another job either. File chapter 13 and find some peace. I now have TWO, super fun W-2 jobs and we are living within our means. There is no dishonor in suddenly losing your livelyhood– just learn from the experience and move on. The court will set up a payment plan for your debts and even save your house if you have the means to pay. They may be able to restructure your car debt as well.

  88. Jeremy commented on Mar 5

    Great, mind blowing post!

    They are hard working individuals who contribute to the community in most cases.

    What does *that* mean? Sounds like you’re selling something.

  89. David commented on Mar 5

    Obama and Hillary want to establish a fund (paid for by the taxpayers) to help the poor hapless homeowners who were the “victims” of predatory lenders.

    A bit of irony here.

  90. zot23 commented on Mar 5

    Again, I need to call for folks to slow down a bit here and not let your emotions carry you away. I’ve been poor and I’ve been rich. As far as I can tell, your monetary worth doesn’t tell you jack squat about what type of person someone is. It just has no bearing as far as I have seen. I’ve known poor folks I wouldn’t turn my back on for a second and rich folks I would trust to raise my kids, and vice versa.

    There are some people (rich and poor) who are always going to game the system. If it gets too far out of line, then you need to shift the system to curb the waste. But this is the key: there is ALWAYS someone who can find a loophole for personal gain.

    We can come down like the hammer of god on this rich squaters just like we could do the same for poor folks that game welfare. But the real question here is: what is the best course for our society and economy as a whole?

    And this is what we should be talking about. How exactly did we get into this mess, and how exactly do we shift the system so it doesn’t happen again? Everything else is petty and useless. Bailout or no bailout, deadbeats or no deadbeats, whatever.

    Why the hell isn’t Greenspan sitting in the Congressional hotseat squirming and sweating his way through an INTENSE grilling of Fed policy over the last decade? Why shouldn’t he be held accountable for the massive housing bubble created by such low rates after the bubble burst? The guy came out and encouraged banks and people to take out ARMs and have no-money down housing loans. Shouldn’t he be called to explain that in an open and honest manner (and if he refuses, shouldn’t that be a crime?)

    We get so pissed off at the: rich, poor, REpublicans, Democrats, [insert whipping boy here], but really the ones who manufactored this mess are skipping away scot free. That’s the real shame here, we are so busy clawing at each other that there will be no accountability, there will be no shift to the system, and we’ll do this all again in 5 years.

  91. foreclosurefish commented on Mar 5

    I’m not sure that this is very surprising, but the high property values is a little bit uncommon in my experience. But there have always been homeowners who learn as much as possible about how foreclosure works just so that they can stay in their homes mortgage free and drag out the process. A few years ago I came across a number of them living in $300-600K homes who would only ask about redemption periods and eviction timelines. The fact that more higher-value homes are now in the same situation indicates, I guess, that $3 million just isn’t worth what it used to be.

    After decades of dumbing down people in government schools and teaching them to be dependent on government, it shouldn’t be very surprising that both homeowners and banks are now petitioning government for bailouts at the expense of those who escaped from government school with their critical thinking ability intact.

  92. MSinNJ commented on Mar 5

    These homes will never be sold for failure to pay back taxes. The lenders that are holding the mortgages will pay the real estate taxes to “protect their intersts” and just add the tax bills to the total amount due.

    Losing $1,000,000 including inflated legal fees, back taxes, unearned interest and related fees is still better than losing $2,000,000 because of an unpaid $50,000 tax bill.

    I’ll take my martini shaken, not stirred.

  93. Chris Romano commented on Mar 5


  94. Robert D. Ashby commented on Mar 5

    It never ceases to amaze me the depths of morality some people will go to.

  95. Henry commented on Mar 5

    Finally the word is getting out about whats up in the market. GREAT ARTICLE !!!!
    As someone who is still a real estate loan officer in Southern California I know that the market is dropping substantially in value.
    You have to remember how real estate works:
    Home prices are based on the demand (which is going down because people are moving from high density areas: Miami, LA, SF, Las Vegas to low density areas like Idaho, Utah, and worst of all out of the country; also since illegal immigrants are not coming here that has also reduced housing demand) and peoples monthly mortgage payment which is going way up because today NO ONE is able to get anything but a 30 year fixed loan.
    No more interest onlys, pay option arms, 2 year arms etc.
    Also to get a loan today your looking at putting 20% to 30% down (not too many people have $100,000 down for a $500,000 home).
    As a result we are gonna be in a market that is gonna be dormant until the economy picks up AND lenders start increasing loan options. Looks like its a buyers market (who has $100,000 for a down payment) for at least 18 months most likely 48 months.

  96. BG commented on Mar 5

    As an investment lender I saw it coming almost 2 years ago. I let my employees go (5) of them. Shut down the commercial office I owned downtown. Made payments on that for 8 months waiting for it to sell. Then the insurance and taxes came due and I almost lost it for that 10k.

    It sold to out of country investors that paid cash. I left some 40k in equity on the table but was more than happy not to have gone into default.

    Sold my personal home, downsized before loosing that, Business trickled to a drip. Today, I make 1/3 of what I was making for 4 years. I have learned that the only people who are being paid are the tax man and the insurance companies and banks.

    Did I read it right, Countrywide sold to Bank of America? BOA is a NA corporation. I believe thats Netherland Antilles and if you think they are paying taxes on their profits your mad. Only the little people pay taxes.

    Remember who was president while the 911 bunch were in flight training? I was in the Persian Gulf when they flew into the towers. America was in trouble long before Bush assumed the watch.

    Get a job, downsize, pay your bills, go to your kids ballgame.

  97. Deb commented on Mar 5

    Somebody should tell Countrywide about this. I have a $1,000 per month mortgage (including taxes and insurance in escrow), had a few unexpected bills last fall, got behind 3 months. Started catching up, but they were already sending me threatening notices, notices of intent to foreclose, notices of foreclosure review……..I’m caught up NOW, but I had to deal with a LOT of stress, in addition to the reasons for the unexpected bills. I try to keep an optimistic outlook, for the most part, but sometimes I find myself really wishing that Countrywide would really take a bath in this real estate mess.

  98. notfooled commented on Mar 5

    One group has gone unnoticed in this whole issue is the Realtors. It is their charge to ensure buyers get the right deal. Many elements of excess profitablity were ignored when novice trusting buyers were purchasing.

    This negligence drove many markets sky high in prices. Once one or two comparable sales were established it was game on.

    One house in my neighborhood turned over in a one year period for over 100k more than purchased just a year before. Now the current owner is stuck upside down, he was not protected by his represenative.

    You cannot represent a buyer or seller in a sale in FL unless your a Realtor. Next time your wondering how it all happened, look into what qualifications you need to be a realtor.

  99. gt commented on Mar 5

    cut off the utilities! that’s all they have to do, no? no electricity and gas, come on, no way these squatters would stay there without their McTV and microwaves!

  100. Geo8rge commented on Mar 5

    BTW, who is paying the property taxes, insurance, ect. I suspect it is not that bad a deal for the bank. Is there a bank or is the property owned accross 100 or so mortgage pools, none of which have active management.

  101. MW commented on Mar 5

    Property taxes get purchased a year after default by private and institutional investors who can not foreclose on the tax lien until 2 years after purchase under Florida law. Hence the municipalities have a very efficient way of getting their taxes satisfied. Once sold, they have no further interest in the debt.

    A borrower/owner can keep the lights on and the utilities on as long as they pay those bills. The Lender can in no way interfere with a private account with a utility company.

    In Florida, we are a title state whereby the owner carries title to the property and the bank has a lien. Under owner’s redemptive rights, a borrower could wait until the day a Judge is ready to rule on a foreclosure and pay off the debt or attempt to make a deal with the Lender. This can also be slowed down by making multiple false attempts to work out a deal and then claim hardship only to have the lender delay the proceedings in an effort to get the loan performing again. If the borrower wanted to………… the process could be thwarted for years.

  102. campbeln commented on Mar 5


    And the money quote:

    I’ve spoken with borrowers who stopped making mortgage payments seven or more months ago. None has received a default notice. Defaults may be much higher than banks are letting on. The data lags are growing suspiciously long. Nobody knows what’s going on. Seven months without making a single payment! Will Fannie guarantee those loans because they aren’t in formal default yet? Nobody wants to know, because if they know, they might be called to testify next year. That’s why lawmakers want to raise the limits now and ask questions later.

    I haven’t found the other article…. yet =)

  103. cubanbob commented on Mar 6

    The lender can be cute and report the unpaid monies as an income to the borrower. The debtor can either pay the tax on the unpaid debt, take his chances with the government or pay the monies owed to the lender.

  104. Weaseldog commented on Mar 6

    If a bank can’t prove that they hold title on property, then they don’t.

    If we allow them to foreclose without a title, then they can foreclose on any property that they don’t hold title on.

  105. Myself commented on Mar 6

    Wow, how surprising.
    They can’t take care of ballots OK, and they can’t take care of legalities either.

    Why is anyone confused about this? LOL

  106. Edwardo commented on Mar 9

    You miss the entire point if you don’t understand that the banks AND the deadbeats are all grifters, all of them! If the deadbeat grifters (who aren’t rich by any valid definition and almost certainly never were) have managed to get the upper hand on the bank shysters, it is simply because they have better assessed the system and more adroitly gamed it. Having said that, Florida seems to be one of those states where grifting is especially pervasive. So if one is inclined to feel wrath, one should do it in an equal opportunity sort of way. Human relations are dynamic and it takes two to tango.

  107. Edwardo commented on Mar 9

    You miss the entire point if you don’t understand that the banks AND the deadbeats are all grifters, all of them! If the deadbeat grifters (who aren’t rich by any valid definition and almost certainly never were) have managed to get the upper hand on the bank shysters, it is simply because they have better assessed the system and more adroitly gamed it. Having said that, Florida seems to be one of those states where grifting is especially pervasive. So if one is inclined to feel wrath, one should do it in an equal opportunity sort of way. Human relations are dynamic and it takes two to tango.

  108. Schahrzad commented on Mar 10

    My friend in San Diego received an NOD in October, and should have received her NTS in January (first week) but so far: NOTHING. The home is off the list, and she has not been contacted by World Savings about the auction date, or anything at all.

    World Savings has a double whammy in foreclosing on her option ARM: loss of principal PLUS loss of neg-am phantom income.

    My guess is that the option ARMs are not being scheduled for auction due to the losses the banks would have to take on the neg-am phantom income.

  109. Jonathan Franklin commented on Mar 18

    I am a reporter for GQ magazine coming to Florida from my home in South America. Everyone here is curious = how did this real estate bubble blow up. And given the discussion on this page, does anyone know of anyone living in their home “drinking martinis” and not paying mortgage?

    I will be in Florida last week of March, thanks for the help

    Jonathan Franklin

  110. Jonathan Franklin commented on Mar 18

    Hello folks,

    Jonathan the reporter here. I forgot to ask. I am coming with Morten Andersen Anyone have good ideas of how to illustrate this article on people living for free or people sending the keys back to the bank? Thanks for any help

    As I said in earlier email am looking for

    1. Examples of “jingle mail” people who just up and left their home

    2. People staying for free because the bank cant prove who owns the loan

    Jonathan Franklin

  111. Noah commented on Apr 16

    I really question this idea that these people can keep their homes for several years without making payments. While the banks may be sticklers over details, local tax authorities will auction a house regardless of mortgage claims. That takes less than a year.

    There are a lot of opinions here based on bad information. You should be careful about what you post.

    The real foreclosure situation as it happens. Keep informed.

  112. Sean commented on Apr 28

    (sigh)…my neighbors lost their home. Middleclass working folks, nice people. Now, as I gaze at their slowly creeping jungle of a backyard, I think “hmmm…when will the bank come and mow this crap.” LOL..looks like my riding mower will get a workout this summer – Will the bank mail me a check for gas/oil/labor used? Ha ha ha…

  113. Jimmie commented on May 10

    Who really owns your property??????

    What will the bank forclosure get the bank? The right to transfer their interest in the loan/lien? Who really owns the land? The grant deed shows title tranfers from seller to buyer, nowhere on the grant deed does it say that the bank owns the land.

    What happens when I transfer my grant deed to Mr. X, while the bank holds only a trust deed? What power does the trust deed have on my grant deed if I’m not in default? Mr. X does not have a trust or any other agreement with my bank…why should Mr. X make good on an agreement he was not an original party to?

    The bank can then only go after me for my promise to pay back the loan right? Once I sign off on my grant deed, I have no control of the collateral or the home itself..

    Can Mr. X choose to stay on his land without having to pay for loan he never signed off on? If the bank gains possesion of the home, the questions still remains. Who owns the land via grant deed?

    for details to follow later…..

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