There is a German word which perfectly describes a feeling we often get... in English-Speaking America. "Schadenfreude" means to derive pleasure from the misfortune of others. Generally, when schadenfreude appears in print, it refers to the failings of a high powered sports team, such as the New York Yankees or (not this year!) the Los Angeles Lakers. These teams are historically so good (note I left out my favorites, the Boston teams, although they could certainly apply) that other sports fans will cheer for two things - their team to win, and team X to lose! On that note, today I bring you a link which will most likely make you happy - and the 'team' is Bank of America.
'Robo-Signing'
Is this Sign Legitimate? (Jeff Turner)
Today's story hearkens back to the so-called "Robo-Signing Controversy". Even though it affected a very small number of buyers (relatively, although not absolutely), banks got a major black eye. In the controversy, some banks were foreclosing on homes without a thorough review of loan documents, and in the process foreclosing on homes which either weren't theirs to foreclose on... or not even in default. Banks followed that up with strike two - the MERS documentation scandals, in which a database known as MERS (Mortgage Electronic Registration System) was the only record of the current owner of many (read: 50% of all) mortgages in existence. Of course, the database was never meant to be used in that capacity. State laws are written so that transfers of property - which are what these mortgages represent - need to be done in writing. Users of the system believed that 'notes' - the promise to repay a mortgage - travel with the loan itself, although a judge ruled that isn't exactly true. Strike two.
Enter Florida
It is in this environment that we meet the Nyerges, our heroes. They purchased a foreclosed house in Naples, Florida in 2009 for $165,000 in cash. Therefore, they were the rightful owners of the home - there was no mortgage note or loan associated with their purchase in any way. You can imagine their surprise, then, when they were served with foreclosure papers a few months later! This is where the sad part of the story begins - the Nyerges had to waste 18 months finding an attorney to take the case, making phone calls, and generally doing a whole load of work they shouldn't have had to be doing. Luckily, the story has a happy, hilarious ending.
Happy Ending
The Nyurges got a judgement in September of 2010... Bank of America had to pay their legal fees in the amount of $2,534. It wasn't over yet - the case entered Bizarro World. Bank of America refused to pay. The Nyurges then did what any sensible person would do (after putting a lien on the local Bank of America branch which originally tried to foreclose on them) - they foreclosed on the bank! On Friday, they showed up at the bank with the lawyer and a judge's order to retrieve an amount of $5,772.88, even if it meant taking the furniture. A visibly shaken bank manager capitulated - and they ended up with a check for their troubles, and agreat story for the internet.
Now, it is important to note that even with the Robo-Signing scandal and the MERS database mess, very few people were foreclosed on under illegal circumstances - however, when it comes to something as important as a house (shelter), the goal should be to drive down the number more and more. Additionally, if it becomes apparent that a house should not be foreclosed on, it shouldn't take 18 months, multiple orders from judges, and a legitimate foreclosure to fix. Buyers who find themselves in over their heads and banks who own the notes and loans find themselves in a precarious position - and there are certainly problems on both sides. The short sale process is loaded with people who are using it to get free rent - by pricing houses too high, making it difficult for people to tour, and other tactics. My question to you, dear reader, is... what is the happy medium? How do we get there?
