
Stop Payment: A homeowner’s revolt against the banks (2012) - wglb
https://harpers.org/archive/2012/01/stop-payment-a-homeowners-revolt-against-the-banks/
======
redleggedfrog
I have personal experience with this back before the 2008 crash.

I owned a house along with someone else, an okay house, bought it for
$115,000, held onto it for 5 years, until it appreciated to $350,000 in those
hurly-burly days.

At some point, and I forgot why it came up, we needed to figure out who owned
the loan. And we never did. It the morass of paper work and nearly fraudulent
claims by various people who claimed to own the loan, we stopped paying on the
loan. We literally had more than one company claim to own it at one point.
What was weird is it was kind of a slow burn, even after we stopped paying. No
one really seemed to care as much as you'd think $900 a month would make you
care.

In the end, we sold the house, never paid off the remaining debt, and split
the cash. I told my lawyer I'd hold onto savings to cover the debt if they
ever came back and could legally claim it.. It's been 11 years. Nothing yet.

~~~
jpmattia
> In the end, we sold the house,

How did the bank lien from the mortgage get handled in the sale?

~~~
kevmo
I am also interested in hearing about this. I guess they guaranteed good
title, but kept money (earning enough interest?) in case the bank comes
knocking?

~~~
redleggedfrog
Yes, I just talked to the person who I owned it with, and this is their
recollection. We could transfer the title, but we were on the hook for the the
mortgage. I'm pretty sure there wasn't a lien on the property.

Pretty funny you mentioned the interest. In the 11 years it's been like
$50.00, since I keep it in just a regular account (instead of CDs or
whatever).

~~~
MertsA
>I'm pretty sure there wasn't a lien on the property

Which country was this in? Banks don't typically hand people hundreds of
thousands of dollars without making sure that they'll get their pound of flesh
when things go south. Not having any kind of collateral is a pretty big
mistake on the bank's side.

------
justboxing
> A lender called Rose Mortgage had originated the loan, then sold it to
> Option One Bank, which sold it to Lehman Brothers, which sold it to Lehman’s
> fully owned subsidiary Structured Asset Securities Corporation, which pooled
> the loan into Structured Asset Securities Corporation Mortgage ­Pass-Through
> ­Certificates, Series ­2006-Z, whose investors were now alleged to be the
> owner of Ibanez’s note. U.S. Bank was appointed trustee of the securitized
> trust, to enforce the payment of the notes, and, if necessary, to foreclose
> on defaulting homeowners such as Antonio Ibanez.

This statement is truly mind-boggling. Took me a minute or two to understand
what was going on (or what I think was going on)...

------
scarface74
When you signed the loan for the mortgage, you made a business transaction
with the bank. You knew full well the terms of the mortgage and the
consequences of not paying it. You also should have known that the bank could
sell the mortgage. They explained it clearly on all six mortgages I’ve signed
for over the years.

But, I also have no moral qualms with “strategic defaults”. The bank also knew
what they were signing.

~~~
cm2187
But mostly I don't understand why would the borrower should have its say on
who he owns the money to. As far as the borrower is concerned he got some
money and must pay it back with interest. What does it change that the payment
goes to institution x or y?

I don't have much sympathy for people who borrow money to then find some
loophole to swindle their way out of their debt. They succeeded? Good for
them! Proud to be dishonest. Let the other borrowers pay for you through
higher margins.

~~~
preinheimer
I think I should have a lot of say over who owns my debt.

There's a lot of mechanics that go into paying my debt, is it automatic
withdrawal? If so how do I change the account? Is it someone I can barely hear
in a noisy call center I get to talk to after an hour? Or is it someone at the
bank around the corner where I first opened my account when I was 14?

I've got a mortgage, they've got a fine UI for logging in and making a bonus
payment, printing out amortization schedules, etc. etc. If they sold my debt
to someone who would only talk to me via fax I'd be pissed off.

~~~
scarface74
_I think I should have a lot of say over who owns my debt._

That’s the thing. You don’t _own_ the debt, the bank does.

 _There 's a lot of mechanics that go into paying my debt, is it automatic
withdrawal? If so how do I change the account? Is it someone I can barely hear
in a noisy call center I get to talk to after an hour? Or is it someone at the
bank around the corner where I first opened my account when I was 14?_

I don’t let any company have direct access to my bank account. I pay my
mortgage and all of my other bills using bill pay _from_ my bank. When the
letter comes saying the mortgage has been changed, I log into my account at my
bank and change the bill pay. A mortgage is one of the easiest transactions.

------
pnathan
As near as I can tell, this complaint sounds like an offshoot of SovCit
approach. Very similar approach.

In any case, I strongly favor discarding deeds, title search fussery, in favor
of a national title registry - the decentralized approach seems, today, to be
pointless. Maybe MERS should be nationalized and turned into the Standard
Property Registry. It should be as simple as checking the database view to see
the title, liens, claims, etc.

edit: I read each and every single document I signed for the 30 year
conventional mortgage, both in the run-up and in the grand finale. Law is
_like_ code, but executed by courts and lawyers with a "virtual machine" of
the great Anglo-American legal tradition governing it. Anyone competent to
write code and read manuals should be able to read their mortgage documents.

~~~
rspeer
Many of these homeowners, unlike "sovereign citizens", actually appear to have
the law on their side. They aren't just making up their own insane
interpretation of the legal system. It even sounds like it's more like MERS
who made up an interpretation of title that disagrees with state laws.

You seem to be saying that MERS's interpretation _should_ be correct, that
MERS's database should be the law of the land and investors should be able to
buy and sell the title to mortgages without states and counties being
involved.

The current system has homeowners getting windfalls because MERS screwed up,
and I suspect that screw-ups in your version would have the opposite effect,
where homeowners get robbed by computers and nobody can be held accountable.

So that seems bad. And what would the benefit be? Sure, it would make
mortgage-backed securities more efficient, but -- why is that good?

~~~
pnathan
Crap happens. That's the point of the courts; to enforce remedy.

If you've ever dealt a little bit with funky titles, you'd know that having a
central authority managing all claims to title would be a _big_ deal and
massively improve life for property buyers. Title searches are _not_
exhaustive. That is why title insurance exists.

If MERS is a title registry and it also manages bundling of debts, I genuinely
don't care. The issue isn't debt bundling, it was granting high risk mortgages
and other high risk behavior.

------
jason_s
looks like Trotter lost... [https://law.justia.com/cases/idaho/supreme-court-
civil/2012/...](https://law.justia.com/cases/idaho/supreme-court-
civil/2012/38022.html)

[https://www.housingwire.com/articles/idaho-supreme-court-
dec...](https://www.housingwire.com/articles/idaho-supreme-court-decision-
gives-mers-court-win)

~~~
javajosh
Man, that's crazy. If the law says you have to have the deed and the note to
foreclose, how can the court ignore this? Honestly, it sounds like Trotter was
trying to game the system, but shit, isn't that what they do to us all the
time? We forgot to check a box, or filled in something wrong, and they hurt
us. We should hurt them for the same reason.

~~~
pdonis
_> If the law says you have to have the deed and the note to foreclose, how
can the court ignore this?_

Simple: that's not what the law says. At least not in Idaho.

According to the court's opinion, what the law says is that a trustee who
forecloses must meet four specific requirements. None of those requirements
equate to proving that you have "standing" (which was what Trotter alleged was
required) to foreclose.

However, the first of the four requirements (p. 5 of the court's opinion) is:
"The trust deed, any assignments of the trust deed by the trustee or the
beneficiary and any appointment of a successor trustee are recorded in
mortgage records in the counties in which the property described in the deed
is situated". Since the main concern given in the article is that MERS and
similar arrangements are circumventing the recording of who owns or has claims
on real property in the local jurisdictions, it would appear that in the
Trotter case, that concern was not present, since the relevant claim
information _was_ recorded in the local jurisdiction; the trustee who
forecloses has to be the one whose trust deed is filed with the county for
that property.

------
mikestew
An interesting article, but the whole thing had a whiff of "paying income tax
is unconstitutional", complete with the protagonist coming off as _just_ a tad
unhinged. IANAL, and even as an amateur one I wouldn't begin to claim to argue
the merits of the law. But none of the folks mentioned in the article garner
any sympathy from me. Banks weren't screwing anyone, AFAICT. Folks just
couldn't make the payment, and found a loophole. Hell, one person had
mortgages on _eleven_ houses in San Diego. Hmm, could it be that they were
just a bit over-extended, and not victims of the evil banking system?

Now, I'm not hatin' on anyone mentioned in the article. Overall, I'm about as
neutral as I would be watching two people I have no interest in have a fist
fight, because I have no great love for banks, either. And if they succeed,
good for them. But the state of ID, as pointed out by another commentor, seems
to put this in the "don't pay income tax" bucket as well.

~~~
Afforess
Paying income tax _was_ unconstitutional. The 16th amendment had to be passed
to make it constitutional. Only Federal Income taxes after 1913 were
constitutional:
[https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_Uni...](https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution)

~~~
dragonwriter
> Paying income tax _was_ unconstitutional.

It was never generally held to be, and the US had (though not permanently)
income taxes prior to the 16th Amendment.

> The 16th amendment had to be passed to make it constitutional.

No, it had to be passed to make income tax on revenues from certain forms of
interest, dividends, and rents to be Constitutional under the (quite
controversial) holding in _Pollock v. Farmers Loan Trust Co_. Income taxes moe
generally were held by the Supreme Court to be excises rather than direct
taxes and therefore Constitutional even prior to the 16th.

[0]
[https://en.m.wikipedia.org/wiki/Pollock_v._Farmers%27_Loan_%...](https://en.m.wikipedia.org/wiki/Pollock_v._Farmers%27_Loan_%26_Trust_Co).

------
rossdavidh
So, I was not surprised to discover that this did not exactly revolutionize
the mortgage industry, and on some level I'm not all that disappointed. There
is a problem, but getting "mad as hell" is probably not the solution.

However...it does remind me of my chief disappointment with the Obama
administration's approach to rebuilding after the Fiscal Crisis, and that is
that we did not really change the financial system very much. I have the very
strong impression that it will all happen again.

~~~
rhizome
In a lot of ways, the government are employees of the finance industry.

------
modells
More banks need to be foreclosed on:

[http://business.time.com/2011/06/06/homeowner-forecloses-
on-...](http://business.time.com/2011/06/06/homeowner-forecloses-on-bank-of-
america-yes-you-heard-that-right/)

------
metalliqaz
Not quite sure what the relevance is today of this article from 2012. It's
core message is a good one, though.

Americans are used to getting pushed around by "the machine". Bills come from
various places (utilities, hospitals, banks, the government) and we pay them
without thinking. Why think that much about it? You _have_ to pay or your
precious credit rating will suffer.

But the mistakes are so common it's likely that everyone has a personal
example from some point in their lives. Credit card fraud, billing errors,
mistaken identity, hidden charges on a phone bill, and on and on, and on
again. The companies are faceless, emotionless, and completely without loyalty
to their customers. It's rather insane that we grant them fidelity in return.

You've paid your insurance bill diligently for years, but as soon as they are
needed, they start looking for ways to get out of paying the claim. They will
happily screw you over the tiniest technicality. The insurance industry
certainly isn't the only offender in that regard.

Some people might scoff at the ideas in the article. You took out a loan, only
a deadbeat leech would default on that loan and expect to keep their house.
Sounds about right, but that assumes we live in the world we all imagine. The
"right" world, where business still resembles interpersonal relationships. It
doesn't, and we don't live there.

It shouldn't just be about fighting Wall Street greed, or getting out of an
eviction. Everyone _should_ be on top of any business from which they have
purchased a service. Be informed. Force them to deliver the service they
promised. Force them to make you whole when you've been screwed. Force them to
prove that they have accurately managed your account and they they truly do
own your debt. Above all, make them actually compete again.

It would be nice if everyone did that, but I don't actually believe that they
will. Oh well...

~~~
dfxm12
_It would be nice if everyone did that, but I don 't actually believe that
they will. Oh well..._

It would be nice if everyone had the wherewithal to. It would be nice if they
did that it would have a lasting impact. There are a few problems though.

"The Machine" is set up so that we don't have the time or money to actually
fight these claims. I certainly can't miss time from work to deal with much of
this. Maybe if it'll bankrupt me either way, but for every little error I've
come across, the lost time and wages aren't worth it financially. Am I going
to go into debt to sue someone just to prove a point? No. That would be a
terrible use of my resources.

Also, these agreements we enter into are written with technicalities built in.
To expose them would take an intricate knowledge of contract law. Companies
rely on this imbalance of knowledge and power to take advantage of us. Even if
there is a successful claim it's not like it would automatically set a
precedent or retroactively void existing contracts or prevent new loopholes to
be written into new contracts.

Action from private citizens is a band-aid here. Something needs to come from
a higher power. It would be great to have a government that works _for us_ in
this regard, but they side with big business here. It sucks, but it's a
reality of the machine.

~~~
ryandrake
I want to know who all these people are who just thoughtlessly pay every bill
they receive in the mail as long as it looks official. I have some bills I
need to start printin’!

~~~
dwater
There already are people who take advantage of others in this way. You will
need to differentiate yourself to be successful in this crowded marketplace.

[https://www.consumer.ftc.gov/articles/0258-fake-debt-
collect...](https://www.consumer.ftc.gov/articles/0258-fake-debt-collectors)

------
toss1
Looks like this is his LinkedIn Page
[https://www.linkedin.com/in/poppakoppa/](https://www.linkedin.com/in/poppakoppa/)

still refers to www.TitleTrail.com but that's up for sale

Looks like he might have some connection to this group still doing some of the
work
[http://certifiedforensicloanauditors.com/](http://certifiedforensicloanauditors.com/)

There are benefits to the ancient system of physically recording everything in
the locale, and potentially good reasons to move to a more modern system.
While I don't have enough info to form a final opinion, I do know that if they
are going to centralize it, they should certainly be held to a standard of
doing it right.

------
mnm1
Instead of bailing out the banks after the crisis, the government could have
decided to do something like this and sever the loans. Let people keep one
home (the cheapest if they had more than one) and let the banks take the fall
for what was completely their own fault. They didn't. They decided that these
banks should continue to fuck people over in the same way, passed a few laws
to prevent it for a few years and that's about it. They claimed these banks
were "too big to fail," a moniker no one understands because it's absurd and
doesn't make any sense. If anyone deserves to be fucked over it's these banks
who fucked the rest of us over royally.

~~~
DubiousPusher
I agree with the sentiment but considering the bailout we got barely passed
because of conservative outrage, anything with even a wiff more of "socialism"
would've been doomed.

Reading about the crisis still pisses me off but I also am grateful there
still is a system. Conservatives flirted with stupid in a big way in 2008 &
2009 and it could've been a lot worse.

------
yrro
> Adam Levitin, a professor of law at Georgetown University, told me that if
> the lawsuits are successful, the banks will be on the hook “for hundreds of
> billions of dollars” and will likely go bankrupt.

I'm guessing that these lawsuits were not, ultimately successful?

Trotter's case ultimately failed: [https://law.justia.com/cases/idaho/supreme-
court-civil/2012/...](https://law.justia.com/cases/idaho/supreme-court-
civil/2012/38022-0.html)

------
AceJohnny2
Referred to in yesterday's article "The million-dollar brownstone that no one
owned" [1] with HN comments [2], about a particular building in NY with an
ugly financial history through the mortgage crisis.

[1] [https://theoutline.com/post/5807/the-million-dollar-
brownsto...](https://theoutline.com/post/5807/the-million-dollar-brownstone-
that-no-one-owned?zd=1&zi=rwqu3xgo)

[2]
[https://news.ycombinator.com/item?id=17804023](https://news.ycombinator.com/item?id=17804023)

------
gehwartzen
For those curious to see who the current Servicer (ie place that takes your
monthly mortgage check) and Investor (ie the actual owner of the debt) of your
mortgage is, the following site at MERS seems to work:

[https://www.mers-servicerid.org/sis/](https://www.mers-servicerid.org/sis/)

I’m actually somewhat surprised that my 6 yo mortgage is still owned by the
same local credit union that originated it.

------
kchoudhu
If anyone wants to know how Vermont Trotter's case panned out, here's the last
appeal he exhausted in 2015:

[https://www.carltonfields.com/files/uploads/Documents/realpr...](https://www.carltonfields.com/files/uploads/Documents/realprop/trotter-
v-bayview-loan-services.pdf)

TLDR: he lost.

------
phobosdeimos
Not just not paying off your debts but being proud of it. You want Greece?
Thats how you end up Greek. But the evil banks! Try buying a house without
them then. But the evil system! You are living in it and you were enjoying the
boom times.

This article reads like a Marxist manifesto. Which is fine if these people
vote Communist next election.

