The 25-Year Foreclosure from Hell.............

By
Real Estate Agent with John Aaroe Group BRE #01708344

I found this article written  which was posted in the Finance section of Yahoo.

I thought I'd pass it along.

How do you feel about this?  An older woman defending her rights, or is this a manipulation of the system?

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The 25-Year Foreclosure from Hell
by Robbie Whelan from the Wall Street Journal  - December 6th

Patsy Campbell could tell you a thing or two about fighting foreclosure. She's been fighting hers for 25 years.

The 71-year-old retired insurance saleswoman has been living in her house, a two-story on a half acre in a tidy middle-class neighborhood here in central Florida, since 1978. The last time she made a mortgage payment was October 1985.

And yet Ms. Campbell has been able to keep her house, protected by a 105-pound pit bull named Dodger and a locked, rusty gate advising visitors to beware of the dog.

"They're not going to take this house," says Ms. Campbell. "I intend to stay in this house and maintain it as my residence until I die."

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.

She offers no apologies for not paying her mortgage for 25 years, saying that when a foreclosure is in dispute, borrowers are entitled to stop making payments until the courts resolve the matter.

"This is every lender's nightmare," says Robert Summers, a Stuart, Fla., real-estate lawyer who represents Commercial Services of Perry, an Iowa-based buyer of distressed debt that currently owns Ms. Campbell's mortgage and has been trying to foreclose. "Someone defending a foreclosure action can raise defenses that are baseless, but are obstacles for the foreclosing lender," he says, calling the system "an unfair burden" for lenders.

While Ms. Campbell is an extreme case, more homeowners in trouble are starting to use similar tactics and are hiring defense lawyers to challenge their foreclosures, hoping to drag out the foreclosure process long enough to reach a settlement with the lender.

Nationwide, there were 2.1 million mortgages in some stage of foreclosure as of October, according to research firm LPS Applied Analytics. The average loan in foreclosure—the process typically starts when a loan becomes 90 days past due and a bank files a complaint—had been in default for 492 days as of October, up from 289 days at the end of 2005, according to LPS. In Florida, one of the states where foreclosures are handled by courts, the average loan in foreclosure has been delinquent 596 days.

Okeechobee County, a rural jurisdiction of 40,000 known for bass- and perch-fishing festivals, hasn't experienced a foreclosure problem as intense as in many coastal regions of the state. Ms. Campbell's house—which has vinyl siding, boards over the windows (to protect it from storm damage, she says), a crumbling backyard swimming pool and an old sedan rusting in the driveway—stands out among the manicured lawns, stucco ranch houses and cattle pastures interspersed among the houses.

In the town of Okeechobee, the county seat, signs of a local economy dependent on agriculture abound: stores selling pre-fab barns, animal feed and lumber line State Road 710 leading into town.

Brian Whitehall, Okeechobee's city administrator, says unemployment in the area is hovering around 14.5%, slightly higher than the statewide average of 12% in September. Foreclosure filings have nearly doubled each year since the state's housing market peaked in 2006, with 617 filed in 2009. But the national housing slump and the area's economic woes aren't immediately apparent in Okeechobee's quiet neighborhoods.

"We're not like the Port St. Lucies of the world, where entire subdivisions are empty and it's like a ghost town," Mr. Whitehall says.

Court records outline the rocky road Ms. Campbell's loan has taken over the past 32 years. In 1978, Paul Campbell purchased the house on SW 19th Lane, a few minutes' drive from the small pharmacy he owned, using a $68,000 mortgage from First Federal Savings and Loan of Martin County. He married Patsy in 1980, and died later that year from emphysema, leaving the property to his wife.

In 1985, Ms. Campbell stopped making mortgage payments because of an illness that caused her to lose income and get behind on her bills, she says.

By then, the savings-and-loan crisis had begun to take hold. First Federal merged with First Fidelity Savings and Loan, which assumed ownership of the Campbell loan. In 1987, First Fidelity sold the mortgage to American Pioneer Savings Bank, an Orlando-based lender that collapsed in the early 1990s.

The loan would change hands four more times, and four different lenders would try to foreclose on her. But every lender that held her loan either merged or collapsed. Each time ownership of the lender changed, the foreclosure case against Ms. Campbell would be dropped.

The loan eventually made its way to the Resolution Trust Corp., the federally owned asset manager that liquidated assets of insolvent S&Ls, and later, to the Federal Deposit Insurance Corp.

In June 1998, the FDIC sold the mortgage to Commercial Services of Perry, which filed to foreclose in 2000. After another illness, Ms. Campbell deeded the house to her daughter, Deborah Pyper. Years later, after Ms. Campbell recovered, the house was deeded back to her. Ms. Pyper declined to comment.

Ms. Campbell's early briefs in the case were strongly worded and colorful, drafted with the help of a now-retired Okeechobee County lawyer.

The briefs presented dozens of reasons why Ms. Campbell thought the bank didn't have the right to her house: Paul Campbell's signature was forged on the original mortgage, she said, and the original sellers never received money from the bank. At other times, she said the mortgage was never properly conveyed between banks and federal agencies, and she demanded paperwork that they were unable to immediately produce.

Attorneys' fees and court costs from previous cases hadn't been paid, or the amounts were wrong, she argued. One brief said that "Defendant Campbell specifically denies the existence of any 'debt.'"

In 2007, a trial-court judge tossed out all but two of Ms. Campbell's defenses, calling the case an "unnecessary paper chase which has been an unproductive and unnecessary use of judicial resources."

Commercial Services paid a court-determined amount to settle court costs from previous cases, and moved to take the foreclosure to trial, with a date set for early October 2010.

In response, Ms. Campbell filed for bankruptcy, effectively blocking the foreclosure until a stay is lifted by a bankruptcy-court judge.

Her filing lists $225,000 in real-property assets, and lists a secured creditor's claim of $63,801, which is equal to the unpaid principal on her mortgage. In previous court arguments, she had maintained that no lender held a secured claim against her because the note was improperly assigned.

A stern, confident woman who can quote Florida civil-procedure statutes by reference number, and who adores cooking Southern food and listening to classic Grand Ole Opry-era country music, Ms. Campbell steadfastly believes she is right. Her most recent argument in the case is that under Florida homestead law, the bank can't seize her house because it is exempt from liens and forced sales.

"Commercial Services of Perry is in the business of doing this. They win some, they lose some," she says. "If they had a case, they would have already won it, years ago."

She maintains that at this point, no one owns her mortgage note, and that because of fraud and paperwork mistakes by the banks that transferred it over and over again in the 1990s, the debt has been made void.

Mr. Summers, the lawyer for the lender, calls the case "the foreclosure from hell." He says Ms. Campbell has appealed the case seven times since he took it on in 2000, and all of her arguments are just stalling tactics.

"It's almost like clockwork. You know you're going to get another three-inch stack of documents every month or so, and you have to take the time to read through it," Mr. Summers says. "That is a burden on the courts, a burden on lawyers to decipher it, and it has enough meat in it that it's not all void."

For example, according to Mr. Summers and to court filings, in 2007, when a judge remanded the case to the trial court, a court clerk failed to issue a mandate establishing the lower court's jurisdiction. Ms. Campbell appealed the case on those grounds.

The bankruptcy should take about four months to adjudicate, Mr. Summers says, at which point he intends to take the foreclosure to trial. According to Commercial Services of Perry's latest filings, Ms. Campbell owes the $63,801 in principal plus $148,000 in interest.

"All she's got to do is pay what she owes: the principal, the interest, plus court costs and attorneys' fees," Mr. Summers says. "But she doesn't get a free ride."

Here is a link to the article:  http://finance.yahoo.com/loans/article/111500/the-25-year-foreclosure-from-hell

 

 

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Ann Allen Hoover
RE/MAX Advantage South - Hoover, AL
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Good grief!  I think I'll have to try reading this again after more caffeine.  What a MESS!

Dec 07, 2010 09:22 AM #1
Rainmaker
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Pam Sitterly
RE/MAX VINTAGE - Magnolia, TX
CRS Magnolia-Tomball Texas

Definitely a manipulation of the system. I think it's a pity.

Dec 07, 2010 09:23 AM #2
Rainmaker
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Lottie Kendall
Today | Sotheby's International Realty - San Carlos, CA
Serving San Mateo County and San Francisco

Yep, I weigh in with Pam, #2 -- can't side with Ms. Campbell

Dec 07, 2010 09:25 AM #3
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Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

It's a big waste of time for everyone...except for Ms Campbell and the pit bull. This is an interesting story. Thanks for sharing. I do have to hand it to the woman.

Dec 07, 2010 09:28 AM #4
Rainmaker
311,259
Glenn Roberts
Retired - Seattle, WA

The system has been in place for a long times and works for the majority. The can of worms opened with the loan scandal we're living through and this now spills the can. There will be regulations that make live miserable for all of us...but she must pay or go.

Dec 07, 2010 09:55 AM #5
Rainmaker
284,682
Carra Riley
Realty ONE Group Premier Colorado - Denver, CO

A very interesting story, but one which seems to have gone on far too long!  She has truly manipulated the system.

Dec 07, 2010 12:27 PM #6
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Tammy Lankford
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Your Lake Sinclair Expert (706-485-9668)

I have a great dane... should I stop paying my mortgage?

Seriously... I can't even believe a dog has lived that long much less is still dangerous.  I'm pretty sure the sheriff in my town would have handled the eviction long ago.

Dec 07, 2010 01:13 PM #7
Rainer
126,166
Brian Doubleday
Brian Doubleday - IML RealEstate - Orange County, CA Broker - Ladera Ranch, CA
Ladera Ranch, Foothill Ranch, Lake Forest, Mission Viejo

I read the same article last night, unbelievable, what a terrible abuse of the system

Dec 07, 2010 03:42 PM #8
Rainmaker
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Gretchen & Mel Ahrens
ColumbiaGorgeFSBO.com - Hood River, OR

I saw the article in the Wall Street Journal - how could it go on for 25 years? When people complain about our legal system, this would be a great example of it being broke.

Mel

Dec 07, 2010 10:42 PM #9
Rainmaker
205,571
Erby Crofutt
B4 U Close Home Inspections&Radon Testing (www.b4uclose.com) - Lexington, KY
The Central Kentucky Home Inspector, Lexington KY

Yet nobody focuses on the mess the banks and fed agencies made when transferring the dang loan around.  Kind of brought it on themselves.  Other banks have the same mess on their hands, careless handling of the paperwork, 

If they're gonna do it, they should at least do it right!

Dec 11, 2010 09:50 AM #10
Rainmaker
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Menlo Park Real Estate and Homes for Sale
Wende Schoof - Menlo Park, CA
WendeByTheBay.com - 650.504.0219 - SF Peninsula

This is definitely a case of "2 wrongs don't make a right".  Yes, the mortgage holders' poor practices brought this on themselves.  However, that doesn't give this woman the right to cheat the system.  And what happened to people being considerate of others?  It sounds like she has allowed her "home" to become a blight on the neighborhood, too, with the boarded up windows and abandoned pool.  Too bad she can't be sued for bringing down property values, since she loves the legal system so much.

Dec 13, 2010 12:42 PM #11
Rainer
157,551
Michael Kitsch
Coldwell Banker - Katy, TX

It seems like there is malfeasance all around.  Talk about taking advantage!

Jul 22, 2011 06:18 PM #12
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