SM keeps them coming, the third installment from Seattle:

The woman who was hauled away for squatting in a $3.3 million house? She has no intention of backing down.  She’s going to keep staking her claim to a house she insists nobody actually owns.

Plus she is staking claims to 10 other houses in the Seattle area that have gone into foreclosure and been passed from bank to bank.

She’s doing it all, she insists, not to make money. But to stick it to the banks.  “Banks do whatever they want and nobody holds them accountable,” Jill Lane said by phone from Disneyland, where she was vacationing after being released by Kirkland police.

“It makes me ill to see what the banks are doing. They aren’t using their bailout money to help anyone. So I’m standing up for the people who are being brutalized by banks every day.”

“This is a national movement,” seconded Jim McClung, a former Bothell real-estate agent and owner of NW Note Elimination, a company he runs with Lane that counsels people in how to “eliminate mortgages” as well as take over empty, foreclosed houses.

“What happened in Kirkland is just the tip of the iceberg.”

It sure is, suggests the FBI. Last week the feds released a report saying housing-related schemes are soaring, including what the agency called “property theft targeting bank-owned properties.”

People file false deeds on houses in foreclosure, either to try to take them over or to bamboozle the police and courts long enough to rent them out to unsuspecting tenants, the FBI says.

McClung and Lane say what they do isn’t stealing. They say they have no moral or ethical hangup about it. If a court determines a bank rightfully owns the Kirkland mansion, Lane says she’ll respect that. She just wants to force the banks to prove it.

Such tactics apparently have worked in a few cases around the country. Last fall a federal judge in New York voided a $461,000 mortgage when the lender essentially couldn’t find a note assigned to the property.

When the mortgage was sold and resold with pools of other securitized mortgages on Wall Street, the seemingly crucial question of who actually owned the underlying property was never properly recorded.

McClung said he was interviewed by an FBI agent the week before last, but has nothing to hide.

“We’re exposing that what the banks are doing is greedy and illegal,” he said.

Both he and Lane said they eventually want to claim abandoned properties and either give them to the poor or turn them into affordable rentals.

Michael Greif, for one, finds this Robin Hood twist to the story hard to take.

“They say they’re after the banks. But they’re really after people like me,” he says.

Greif, a 47-year-old from Lynnwood, paid NW Note Elimination $5,000 in May to help him stake his own claim to an empty, foreclosed house, also in Kirkland.

Brand new and on the market for $1.3 million, the house fits the profile. A builder lost it to a bank, which in turn went belly up, its assets transferred by the feds to another bank. The plan was to try to force this second bank to prove its ownership, and, if it couldn’t, simply take over the house by filing deeds and liens and then trying to sell it.

In addition to the $5,000 upfront, NW Note Elimination was to receive half the proceeds of any sale.

Within two days, though, Greif started having doubts. A friend warned that it sounded fishy. When Greif called the listing agent on the house and said he was going to file documents staking a claim, the agent told him he was out of his mind.

“It’s all embarrassing to admit to you,” Greif told me. “There’s an entire underground industry of this kind of stuff going on. I knew it was wrong, so I’ve got no excuse. I got caught up in it.”

Why tell your story? People will call you a fool, I said.

“I am a fool,” he said. “I wish I could have read a story about someone else who was a fool so I wouldn’t have ended up the fool.”

He’s been trying for six weeks to get his money back. The check was made out to McClung’s company. McClung told me Saturday it’s all a misunderstanding — that Greif was misled by a wayward employee who no longer works with McClung.

“So I can put in the newspaper that you hereby pledge to refund his $5,000?” I asked McClung.

“Yes,” McClung said. “He’ll get it back next week.”

I’m obviously no lawyer, but the NW Note Elimination contract that Greif signed looks to me to be gobbledygook. For example, it refers to quit claim deeds as “Quick Claim Deeds,” suggesting whoever wrote it doesn’t know much about real estate.

McClung said he’s troubled by the “greedy, negative spin” of recent press coverage.

“We’re trying to help people,” he said.

The spotlight hasn’t been all bad. Ever since Lane squatted in that mansion, the pair says, they have been deluged with e-mails and phone calls.

Not from skeptics. From people saying, “The banks are screwing me, too. Can you help me out?”

“We’re getting so much interest we’ve been turning people away,” McClung says.

Like I said: Down the rabbit hole we go.


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Jim the Realtor
Jim is a long-time local realtor who comments daily here on his blog, which began in September, 2005. Stick around!

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