Submitted by Darryl Phillips on Wed, 12/28/2011 - 3:47pm
There is a real need in our society for Quality Squatters, that is, people and families who need good housing and are willing to invest their time and money and some risk. The possible reward is a lovely home, giving back to the neighborhood, and acting in the best spirit of the Occupy movement. (And sticking it to the money bastards who created the housing disaster in the first place.)
What is a quality squatter? “Squatter” is easy, it’sanyone who moves in where he or she doesn’t belong. “Quality” isn’t so easy, it involves ethical motives, understanding the risk/reward relationships, and willingness to put in the physical, mental, and spiritual effort necessary to make it work.
This venture is not for everyone, not even for most people. There are those who will say it is not for anyone since it potentially involves breaking – or at least bending – laws. Others will differ, understanding that legal and illegal is quite different from ethical and unethical. The acts that brought us the housing mess were largely legal but clearly unethical. Taking back ill-gotten homes is the opposite, ethical but maybe illegal. The difference is, ethics cannot be litigated, they exist as an absolute. Legal, on the other hand, is something that can be argued in court and is anything but absolute.
There is risk, to be sure, in quality squatting. Life is full of risk, driving to work risks an accident while not going to work risks being fired. Eat and you risk food poisoning, don’t eat and you risk starvation. There is no escaping risk and each person must decide which risks to take and which to avoid. Quality squatting has risks, staying in a tiny apartment with high crime and higher rent is a risk too. As for living with the in-laws, well, let’s not talk about that risk!
So sit back, take a sip of whatever suits you, and let me tell you a story...
Part One... The History
Way back in history, say until the 1990’s or so, buying a house was a fairly simple affair involving saving up enough money for a decent down payment, demonstrating the ability to make all the payments, and signing the papers. The two principal documents were the promissory note and the mortgage. Remember these terms, they are key to all that follows.
The promissory note is simply a document that says the purchaser will make the payments, else the purchaser will be in default. And the mortgage says that if the purchaser is in default, they can take the house back. Of course there is a lot of legalese, but that is the nitty-gritty. Those two documents are “joined at the hip”. For reasons lost in antiquity (or lost on me) they are separate, but neither can do much without the other. Being in default is meaningless without a penalty, and a mortgage is useless unless there is an ability to enforce it, that is, unless the condition of “default” attaches.
The note and mortgage signed by the purchaser are known as the “blue ink” copies. They’re the originals that were actually physically held and signed.
OK, this is getting long and tedious. If you have no interest in such detail you’ll never make it as a quality squatter!
Mortgages were often sold from the originating bank to an investment firm. My first mortgage, for example, was sold to Mutual of Omaha and I sent my payments there. I’m sure they also had the promissory note, or at least had a direct means of getting it from the bank if it was needed.
A mortgage must be recorded at the registrar of deeds at the county courthouse and the necessary fees must be paid. Every time the mortgage is transferred to another owner it must again be recorded and fees paid. It’s important to remember this.
Part Two... Slice and Dice
Somewhere in the 1990s, the middlemen began to see a way to make a lot more money than just collecting interest. It worked like this: Take a big stack of mortgages and bundle them (think of gluing them into a block) and then dividing that bundle into “securities” that can be sold (think of turning that block on its side and slicing it like bread). This was touted as minimizing the risk to the investor. Of course once a middleman did this, it was inevitable that other middlemen would do the same thing by buying slices from different sources, gluing them together, turning the block the other way and slicing again. This is the whole idea of securitization.
If I own, say, a hundred shares of General Motors, there is no way I can claim that a particular box of car parts belongs to me. It doesn’t work that way. Similarly, the owner of “securitized” mortgages can’t claim that a particular home belongs to him. (The light bulb is beginning to come on!)
The middlemen, of course, wanted to increase their take and they did it in several ways. One way was to increase the number of loans, which was done by finding more borrowers, which they did by making it easier to get a home loan. They used schemes such as no money down and phony income statements and second mortgages and refinancing and all the rest. As more of these buyers came on the market, supply and demand caused home prices to skyrocket. Which was fine for the middlemen, churning more dollars meant more profit and they made a bunch. But they also knew the quality of mortgages was going down and there would be more defaults, so they simultaneously began betting that the securities would fail. And when they failed, the middlemen made more tons of money. Megatons. Plus the homebuyers got kicked out in the street.
Part Three... MERS
The securities market is fast paced. To keep up it is necessary to slice and dice and buy and sell the mortgages at an alarming rate. This could not be done the old way, where someone had to physically go to the courthouse and stand in line and transfer the mortgage and pay the fee, over and over again.. The recording backlog is days or weeks, some places are reportedly two years behind, so the middlemen invented MERS and the plot thickened.
Mortgage Electronic Registration Systems, MERS, is key to understanding the whole mess. It’s a private outfit located in Delaware with about 50 employees operating an immense database. Just a humongous spreadsheet, that’s all MERS is. Their customers are middlemen who purport to use MERS to keep track of all their middlestuff. MERS does not own mortgages, they only maintain a list of what the middlemen tell them. Through MERS, mortgages can be sliced and diced in milliseconds without standing in line.
The laws say that mortgages must be recorded at the courthouse and the fee must be paid, but MERS sidestepped all that. The fees aren’t getting paid, which is fraud or theft or something or other. Governments don’t like missing their share of the money. This is important later when we discuss the arguments that might be made in court.
Google “MERS” when you have the time. There has been a lot written on the subject and for the quality squatter a good understanding is essential.
Part Four... The Promissory Note
MERS keeps track of mortgages, but who keeps track of the “joined at the hip” document, the promissory note? Quick answer: nobody. Once the mortgage is sliced and diced and shaked and baked there is little chance of ever getting the note and the mortgage back together, which led to:
Part Five... Robosigning
Much has been written on the middlemen’s use of robosigning, the process of creating fraudulent documents that purport to join the note and mortgage back together. Google “Linda Green” or “robosigning”. CBS’ 60 Minutes did an excellent piece, watch it at http://www.cbsnews.com/video/watch/?id=7361596n
Robosigning is fraud, plain and simple. Robofraud. Remember this when planning the defense of your newly squatted home!
Part Six... Abandoned Homes
I got interested in all this because of the home across the street. It’s a nice home, 3 or 4 bedrooms, formal dining room, two-car garage, 2-1/2 acres, lots of trees and really a nice place in a nice neighborhood. It has been empty for two years. No foreclosure, just nobody living there anymore. A realtor tried, to no avail, to find out who owns it because he has interested parties. But the house just sits there with limbs littering the yard and grass turning into weeds turning into saplings. It makes the neighborhood look bad. I even thought about putting up a Squatters Wanted sign. And that’s what I’m writing about, the need in our society for quality squatters.
Part Seven... How to find your house
You’re looking for a home that is obviously vacant but doesn’t have a For Sale sign on the lawn. Talk with the neighbors, ask who lives there and why did they move and how long has the house been empty. Ask if there was a foreclosure, and when. Ask if they know who you should contact about the house. After you’ve talked to a couple of neighbors it’ll be safer to prowl around the property a little, looking for reasons to like or dislike the place.
Assuming it’s the home you want, visit the Registrar of Deeds office at the courthouse. They can take the street address and find the legal description, the owner, the mortgage holder, and records of recent title or mortgage transfers. Get all this and see if MERS is listed anywhere. If so, you can be assured that the records are disputable. Often MERS will have transferred the mortgage to another party, usually a successor to MERS. Since MERS cannot own a mortgage they could not sell it, which is a pretty sure sign that the place is in legal limbo.
Unless MERS is listed, I’d look elsewhere. There are lots of empty or abandoned homes that have good owners and have a valid reason for being unused. We are not looking to inconvenience them but rather the moneyed middlemen who created the housing disaster. Those we are quite willing to inconvenience!
Part Eight... Moving In
I’ve never done this and don’t know anyone who has so this is wild conjecture and nothing more. But gaining entrance to a house is easy, just keep looking. Try the obvious like looking for a key in the flowerpot or checking if the garage doors are really locked. I’m hesitant to proceed further along this line because I don’t want to write a how-to manual for burglars and thieves, suffice it to say that if you want in there is almost always a way without breaking anything. Use your imagination.
Getting the utilities turned on in most cases simply involves paying the deposit. Utility companies don’t care who holds a legal title or lease or whatever. Then, on a pretty bright friendly morning, arrive with the moving van and act like you’ve just purchased your dream home. Invite all the neighbors in for coffee and goodies. Sleep well, quality squatter you.
Part Nine... Housekeeping
Keeping the house will take creativity and hard work and luck and skill but it can be done. Mostly it’s just staying a step ahead of the adversary. Remember at all times that you are doing society a service by keeping the property maintained. You are the good guy, you are benefiting the true owner if there is one, and benefiting the neighborhood overall. Having you in the house is far better than leaving it as a target for vandals and vermin. And, true to the goals of Occupy, you are helping return to the people some of the ill-begotten spoils of Wall Street. You are on the side of the angels.
So maintain the place. Manicure the lawn, plant flowers, trim trees. Any homeowner knows there is always maintenance. Clean the gutter, repair the door, paint the trim, replace the mailbox, do whatever you would do if you owned it. Someday in court it may be helpful to show that you have made a positive contribution. You’ll want to keep a diary with before and after pictures, material receipts, notes of hours spent, all that sort of thing. You may want to pay a lawn service or have the carpet steam cleaned. The costs will build quickly if you’re doing a good job of keeping the place up. Figure on maintenance costing a quarter of the rent value of that property. That leaves you the other three quarters.
It’s important to maintain the best possible relationship with all the neighbors. If you are a churchgoer, consider a church attended by a neighbor. If you have kids, get involved in PTA and soccer. In short, become a good member of the community. These connections will be invaluable when an outsider comes to battle over the property.
Part Ten... Need a Lawyer?
Simple answer: yes, you need a lawyer but this is the tricky part. If someone went to a lawyer and said they were getting ready to rob a bank and need legal advice on how to get away with it, the lawyer must and will call the cops. Otherwise the lawyer would be an accessory before the fact and no lawyer is going to climb out on that limb. So, personally, I would never tell a lawyer my squatter plans in advance. At the same time, you may need him in a hurry so you need to shop judiciously, perhaps asking for foreclosure avoidance advice or some such.
I’d look for a lawyer I could work with. And that’s the key, you need someone who is on your side and is willing to let you do much of the legwork. Most of what needs to be done doesn’t really require a lawyer, just help and guidance as needed. There are a few talented souls who’ll chose to go it alone and I congratulate them. The other 98% of us need a lawyer.
Choose your lawyer carefully. Most will give an initial consultation without charge. This is the time to interview them, Try a few until you find that individual who fits your personality, you may be partners for a number of years. Good vibes are essential, probably more important than talent. The supply of lawyers exceeds the demand so you are in a position to negotiate, particularly with the one-lawyer firms. Hungry lawyers tend to pay more attention and anyone who is sober and has passed the bar (look for both!) has the ability to handle this sort of case.
That lawyer may end up costing you another quarter of rent value, though I can’t see how it would be that expensive. That leaves you the other half of what rent would be, plus you have the pleasure of a finer home. And there is a chance you can end up owning the home outright which makes the legal costs small indeed.
Part Eleven... That knock on the door
In an idyllic world it might never happen, but in the real world eventually someone will come to ask what you are doing in that house (if you’re lucky), or (if you’re less lucky) to tell you to get out. Indeed, it very well may happen within the first few days since many of the loan servicers have people who check houses periodically. Be friendly but don’t tell them anything they don’t already know. My answer would be that the matter is not fully settled and may well end up in court. They’ll just report it up the chain of command and perhaps it’ll get lost along the way. Or perhaps not.
Never lie to a cop. You can tell him you need to confer with your lawyer or something like that. Smiling helps a lot. Invite him in to see what great things you’re doing with the place. Your lawyer will give you tips on what to say. For example, one answer might be that you are establishing “adverse possession” which you are. Google that term and see if it might suit you. Depending on the state, there may be several legal actions you can commence which will give you a piece of paper from the court house, any such paper should be enough to show a cop and avoid arrest.
Adverse possession is an interesting legal concept that has applications to quality squatting.. Google the phrase and be amazed. According to http://www.lawchek.com/resources/forms/que/advposs.htm a squatter could gain title in as little as 2 years (Arizona) to 30 years (Pennsylvania). Typical numbers are 5 to 10 years. Choose carefully.
Some people say the whole idea of quality squatting is just breaking and entering. As I see it, quality squatting is the opposite. In the typical B&E, the thief sneaks in, often at night. The squatter arrives in plain sight. The thief gets in and out quickly, the squatter intends to stay. The thief takes off with things of value, the squatter brings things of value (care, upkeep, etc) onto the property. The thief reduces overall value while the squatter increases it. Don’t fall for the B&E argument.
Part Twelve... Defending your Homeland
Whether you employ a lawyer or not, there are two books that are, in my view, essential to understanding how to proceed. Lloyd Segal’s “Stop Foreclosure Now” and “23 Legal Defenses to Foreclosure – How to Beat the Bank” by Troy Doucet deal with a lot more than foreclosure, they explain how the system works and how it can work to your advantage. They’re available on Amazon or “the local bookstore near you”- as if there was one anymore.
Segal provides a breakdown of laws specific to each state and a provides a number of worksheets that are informative and useful, while Doucet includes applicable case or civil rule, gobs of forms to compel the plaintiff (that’s the bad guy) to produce this and swear to that, plus the Federal Rules of Procedure and angles that you’d never have thought of in legally keeping your home.
As always, the web is invaluable in your quest. You can find court transcripts and see how other homes were successfully defended, read the latest developments in law to see how the tide is quickly turning against the middlemen, and follow how the state Attorneys General are fighting on the side of the homeowner. The information is essential and the message that you are on the winning side is heartwarming.
In the legal system it boils down to this: the only ones who can “evict” (boot you out of your new home) are those who own it now. If they cannot prove they own it they do not have “standing” in court and cannot do anything. Increasingly, judges are coming to understand the fraud that has been perpetrated against the homeowners and against the registrar of deeds downstairs in the courthouse, and when it hits that close to home it becomes serious indeed!
The “Show Me The Note” defense is becoming more and more common, as the word spreads that the banks and middlemen can’t prove that they own the place. If you can show that there is a fault or fraud in the mortgage paperwork, you win. Well, perhaps not win but at least add a few months or years to the process before you circle back and go to court again. Remember, if the middleman had legal ownership of the property he would have put it up for sale. But he didn’t.
Eventually the entity that purports to own the mortgage may be driven out of existence, or permanently prohibited from throwing more people out of their homes, or whatever. This fraud-infested system cannot long survive and when it is outlawed there is no telling how the situation will be resolved. Very possibly you could end up owning the home or at least being able to purchase it for a few cents on the dollar.
Quality squatting is the perfect manifestation of Occupy Wall Street by finding a way to benefit from the mess caused by Wall Street. Again, compared to those who’ve created this national disaster, you’re on the side of the angels. Go for it.