The Real Estate Bloggers

How To Make A Foreclosure Last More Than 25 Years

Posted: 11 Dec 2010 07:46 AM PST

Foreclosure-4 If I was working at a bank handling foreclosures this story would make me break out into a cold sweat. The efforts of Patsy Campbell, a central Florida woman who stopped paying her mortgage in October of 1985. The banks, up to 6 now, have tried to foreclose on her home since then. With a myriad of legal wrangling and some sympathetic judges combined with inept mortgage companies that cut corners in their paperwork, she has kept the house and not made a payment since 1985.

Ms. Campbell’s foreclosure case has outlasted two marriages, three recessions and four presidents. She has seen seven great-grandchildren born, plum real-estate markets come and go and the ownership of her mortgage change six times. Many Florida real-estate lawyers say it is the longest-lasting foreclosure case they have ever heard of.

The story of how Ms. Campbell has managed to avoid both paying her mortgage and losing her home, which is currently assessed at more than $203,000, is a cautionary tale for lenders that cut corners and followed sloppy practices when originating, processing and servicing mortgages. Lenders are especially vulnerable in the 23 states, including Florida, that require foreclosures to be approved by a judge.

Ms. Campbell has challenged her foreclosure on the grounds that her mortgage was improperly transferred between banks and federal agencies, that lawyers for the bank had waited too long to prosecute the case, that a Florida law shields her from all her creditors, and for dozens of other reasons. Once, she questioned whether there really was a debt at all, saying the lender improperly separated the note from the mortgage contract.

She has managed to stave off the banks partly because several courts have recognized that some of her legal arguments have some merit—however minor. Two foreclosure actions against her, for example, were thrown out because her lender sat on its hands too long after filing a case and lost its window to foreclose.

Ms. Campbell, who is handling her case these days without a lawyer, has learned how to work the ropes of the legal system so well that she has met every attempt by a lender to repossess her home with multiple appeals and counteractions, burying the plaintiffs facing her under piles of paperwork. via the WSJ

What makes me think after reading this is that her mortgage paperwork in 1985 probably was done much better than many of the securitized mortgages done in the past few years. If someone devised a system to fight these foreclosure actions in the courts you could add a whole new layer of costs for the banks and the lenders.

The shoddy paperwork as the loans of the mid 2000’s has left a gaping hole in the foreclosure market. The banks better hope that the homeowners are lazy and don’t fight them. They could end up with many 25 year foreclosure battles on their hands.

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How To Make A Foreclosure Last More Than 25 Years