
Foreclosure to Home Free, as 5-Year Clock Expires - jaynos
http://www.nytimes.com/2015/03/30/business/foreclosure-to-home-free-as-5-year-clock-expires.html
======
MrZongle2
Not too long ago, the fact that I've paid my mortgage every month for over a
decade (even during times of unemployment) would have been considered a sign
of responsibility and financial security.

But reading this, I can't help but think that doing so simply makes me look
like a chump.

~~~
rayiner
Buying a house with a mortgage is just a market transaction. There is no moral
dimension, and it's naive to inject one. These people went into the
transaction in good faith. Now, the law gives them the right to invoke the
statute of limitations, and the banks knew that when they made the loans.
There is nothing wrong with their invoking the legal rights they have. If the
shoe were on the other foot, the banks would do exactly the same thing.

~~~
mikeash
Why can't there be a moral dimension? It's a market transaction that involves
making a promise. Lots of people think that fulfilling promises is a moral
thing.

~~~
jackmaney
> Why can't there be a moral dimension?

Because despite what too many capitalists would tell you, corporations are not
living beings, much less people.

~~~
cma
Neither are families, what's your exact point here? Moral free reign against
groups but not an individuals?

I'm not arguing against using the statue of limitations to keep your house;
I'm just wondering exactly what you have shown by reiterating that a
corporation is not in fact an individual human being.

------
carsongross
Just another hammer-blow to the underlying element that makes any society
work: trust. Given that we nuked contract law when GM bond holders got shafted
in '08, any reaction is simply the twitching of a dead corpse.

With high trust social environments, almost any government and financial
system can work. In low trust social environments, none do.

~~~
MCRed
I think I agree with you, but how do you see this playing out? Or maybe, how
has it played out in the past?

Certainly I lost trust in the US federal government when I saw that it wasn't
obeying its own laws, and not prosecuting itself, and there was no method to
bring it into compliance. I lost trust with state governments when I got
"audited" for a business I never owned, assessed a tax liability for that
business which never even existed in the state, based on an auditors
assumptions about business done in the state, and was told that it was legally
binding in a "guilty until proven innocent" way, and that I had to pay half a
million dollars in order to appeal the audit (for a business, remember, that I
have never had any connection to.) Needless to say I don't live in that state
anymore.

But I do have to live somewhere. I would like to buy a house. But how can I
when I could lose it to imminent domain when the mayor's cousin's construction
company gets a great opportunity to develop a multi-use master planned
community on the land?

~~~
carsongross
My guess (and it is just a guess) is a continuing stagnation and transition
into a south american situation, where everyone is either connected to power,
poor or trying to look poor. As it becomes increasingly clear that the rules
are unstable, subjective and enforced arbitrarily, people will turtle up.

As far as what I'd recommend, well, first I'd recommend not listening to me.

After that, I'd recommend getting as lean as possible. Mr. Money Moustache has
some good tips on this, with two caveats: I think he is too optimistic about
equities and I don't mind spending money on a few high quality things that I
can give to my kids. For all his talk about mindless index-fund investing, he
did pay off his house when the chance came up, so do as he did, not as he
says.

The nice thing about this minimalist approach is that it's probably the right
thing to do anyway, when it comes to being happy.

------
bruceb
"Instead of making her roughly $1,300 monthly mortgage payment, she pays her
lawyer $500 a month to represent her in court."

I see the winner in this situation.

~~~
falcolas
I see two. She's effectively making $800 more a month.

------
zaroth
Very hard to feel bad for the banks in this, since it's only the epic scale of
foreclosures that allowed anything like this to happen, and the scale of
foreclosures is a direct result of non-existent underwriting.

However, the problem is, it's not the banks footing the bill, it's the
taxpayers. As usual, the less you pay, the more you get, and now apparently
that includes the wholesale American Dream of home ownership.

What I don't understand from a legal perspective, is how statue of limitation
can possibly apply. The time limit would have to be filing of the case, not
conclusion right? I know there were issues with robo-signing and all that, but
did the loan servicers really drop the ball so badly? (Edit: The answer is in
the actual case PDF I found and linked to below -- the original foreclosure
was dimissed without prejudice because the bank couldn't produce the necessary
documents, namely an original copy of the mortgage.)

Mortgage servicing is outsourced by the government in fairly lucrative
contracts. The bank you get the loan from is almost never (credit unions are
the obvious exception) the company that collects your payments each month. I
would have guessed it's up to the loan servicer to handle the foreclosure...
the article simply doesn't have enough details behind the catchy headline.

Also so good to know they won't even have to pay tax on the income... </s>
[http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-
Debt...](http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-
Act-and-Debt-Cancellation-)

And here's the actual case... so much for "NOT FOR PUBLICATION":
[http://noonanandlieberman.com/media/pdfs/washington-11-6-210...](http://noonanandlieberman.com/media/pdfs/washington-11-6-2104.pdf)

Secion I. Introduction:

    
    
      “No one gets a free house.” This Court and others have uttered
      that admonition since the early days of the mortgage crisis, where
      homeowners have sought relief under a myriad of state and federal
      consumer protection statutes and the Bankruptcy Code. Yet, with a
      proper measure of disquiet and chagrin, the Court now must retreat
      from this position, as Gordon A. Washington (“the  Debtor”)  has
      presented  a  convincing  argument  for  entitlement  to  such
      relief.  So,  with figurative hand holding the nose, the Court,
      for the reasons set forth below, will grant Debtor’s motion for
      summary judgment.
    
    

Edit 2: The lawyers for the bank seem like complete neanderthals?! The statue
of limitations is 6 years from the date of maturity, which was accelerated, so
debtor claims it's been 6 years since the accelerated date. But the statue
specifically says the bank can _extend_ the date of maturity by written
instrument. So... write a note de-accelerating the acceleration by 1 year, and
re-file the foreclosure.

It's also not even clear the statue in question was effective in this case.
The judge assumes that based on a prior statue which did say it was to be
effective for all foreclosures filed after that date, but the law in question
says no such thing.

And a final closing remark, as I just got to the last sentence in the PDF:

    
    
      "The Court will proceed to gargle in an effort to remove the 
      lingering bad taste."

~~~
x0x0
It's hard to stomach any actor in the court system who whines about gargling
to remove the bad taste when the law works out to a homeowner's advantage but
doesn't bring up how any large bank is treated with kid gloves by the sec.
They're never prosecuted, they're given fine after fine after fine and allowed
to treat it as a cost of doing business with no real consequences, etc.
There's voluminous coverage, but just a bit:

[http://blogs.reuters.com/felix-salmon/2014/04/09/yes-the-
sec...](http://blogs.reuters.com/felix-salmon/2014/04/09/yes-the-sec-was-
colluding-with-banks-on-cdo-prosecutions/)

[http://www.rollingstone.com/politics/news/the-9-billion-
witn...](http://www.rollingstone.com/politics/news/the-9-billion-
witness-20141106?page=5)

~~~
jackmaney
As much as it pains me to admit it, I agree with you here.

------
happytrails
I'm sure this an an exception to the rule. The housing market in Southern
California is crazy overpriced based upon current wages.

------
bradleyjg
Homeowners, the most blessèd of all debtors. It's not enough that the
government massively subsidies the interest rate and allows interest to be
deductible. No, the government also has to sponsor all sorts of modification
programs to shield borrowers from the horror of thier supposed-to-be one way
bet going wrong. Heaven forbid someone pay a mortgage on a house that's
underwater, why that'd be like expecting a college dropout to pay back his
student loans!

~~~
Arubis
So buy a house.

~~~
MCRed
Part of there problem is these programs incentivize financial bad behavior and
punish those who are financially responsible with higher taxes to pay for it.

~~~
Lawtonfogle
This seems to be a growing trend with government intervention. Likely it is a
byproduct of ill informed decisions that given perverse incentives. Consider
workers who actually reject pay raises because they would lose more in
benefits than the pay raise would give them.

~~~
thirdtruck
Similar to how some families have to actively avoid making too much money,
lest they jump into a higher tax bracket and end up losing more than they
gained (while the next-next bracket remains a distant dream).

~~~
Lawtonfogle
Except that in that one case, at least in the US, only the income inside the
new tax bracket is taxed at the higher rate. The tax brackets are actually
something they have right (I'm not saying I agree with the tax rates, only
that earning a dollar more in income will never cost you a dollar or more in
tax).

~~~
zaroth
Many parts of the curve are net negative marginal income. It's not just higher
tax rates on the additional dollars, it's decreasing subsidies, and phased-out
deductions; the 3 forces work in concert to make earning more actually
(literally) taking home less.

~~~
Domenic_S
That's precisely what GP originally said. Here he was clarifying that tax
brackets themselves don't work this way, although government assistance can.

In graph form:
[http://1.bp.blogspot.com/-_-6Fsycanmw/ULO_5kk3fxI/AAAAAAAAAU...](http://1.bp.blogspot.com/-_-6Fsycanmw/ULO_5kk3fxI/AAAAAAAAAU4/y1PbUElDS34/s1600/marginal-
tax_6.PNG)

