Thanks to SM for keeping an eye on this story:
By this chapter of this curious tale, Mark von der Burg surely is wondering: Why me? What did I do to deserve this? He’s the Eastside real-estate agent who, two months ago while prepping for an open house to sell a $3.3 million mansion in Kirkland, was stunned to find that complete strangers had moved in and were staking a tortured legal claim to the foreclosed property.
Von der Burg says that while the mansion-squatting story may have been entertaining — it ended when police retook control of the house for the bank that owned it — it cost his client, a bank, $35,000 in legal fees and bills for locksmiths, security and cleanup. So count him as not amused that this week, the same team of squatters apparently attempted to stake claims to three new mansions on the Eastside — including a $2.2 million, 5,000-square-foot Craftsman in Bellevue for which von der Burg is, once again, the listing agent.
“These people need to be stopped,” he said. “How long are we going to let this go on?”
Police say no one has as yet moved into any of the houses. But all three had letters tacked to the front doors ordering anyone claiming ownership “to surrender possession within three days.” And then threatening “judicial proceedings” against anyone who doesn’t comply.
The name and signature of James McClung was on all three letters. He’s a former Bothell real-estate agent and owner of NW Note Elimination, a company he runs with Jill Lane — the woman who was arrested for squatting in the Kirkland mansion in June.
Neither McClung nor Lane got back to me this week. But both said in June that despite being kicked out of the Kirkland mansion, they had a list of at least 10 other houses in the Seattle area to which they intended to stake claims. All the houses were tied to bank failures — the bank holding the loan on the properties had gone under and had its assets transferred to another bank, or to the federal government.
The pair hopes that the actual documentation of who owns these properties was mislaid or improperly recorded as mortgages were divided and resold on Wall Street during the bubble years. It has become a strategy in foreclosure cases around the country to force banks to “show me the note.”
“It’s becoming exasperating,” said Capt. Mike Ursino, of the Kirkland police. (Two of the new targeted properties are in Kirkland.) “McClung’s thinking is that if he keeps trying, one day he’s going to win and he’ll miraculously have a million-dollar house.
“Meanwhile, everybody else goes out and works for what they’ve got.”
Ursino said “No trespassing” signs have been posted at the two Kirkland houses, “to give us a bit more of a hammer if anyone tries to move in.” He said Lane still hasn’t been charged with any crime for the June squatting, though the Kirkland city attorney may still do so.
Ursino said detectives questioned McClung back in June and, like me, found he had no moral or ethical qualms at all about what he’s doing.
“He was very open about it, I’ll give him that. I don’t think he even knows he’s doing anything wrong,” Ursino said.
He’s not all talk. In June I featured a man who said he had been scammed after he paid McClung’s company to stake him a claim to an empty house. I confronted McClung about this, and, insisting his goal is to stick it to the banks and help the little guy, he pledged to return the man’s money.
I was skeptical, to say the least. But the man, Michael Greif, wrote a few weeks ago to report that McClung had paid the money back, true to his word.
The squatters have also said they want to give the proceeds from the claimed houses to the poor or to affordable-housing groups. Is it possible these squatters are some sort of “honest thieves?” I asked Capt. Ursino. “I don’t know about that,” he said. “But the whole thing is about the darndest thing I’ve ever heard.”
Von der Burg, the real-estate agent who now finds himself plagued by the squatters, says the Robin Hood, punish-the-banks story line is baloney. In June, he says, the squatters used the Kirkland house for partying, not charity.
“They had a big blowout there, with naked couples running around,” von der Burg says.
Naked mansion-squatting?
“When you have to clean up after something like that, you lose your patience for all this spin,” he said.
I was just thinking about this situation the other day, and wondering if there were further developments. It makes me think of the series “The Riches” that ran a few years ago on FX.
Poor banks :’-( all they wanted to do was sit on properties they screwed stupid homeowners out of and wait for the federal reserve to lower interest rates to the point monthly payments are low enough to create a population of permanate renters.
Nothing better than watching the scammers get scammed.
Is rather karmic, isn’t it?
The scheme does work if you can stay long enough thru adverse possession. It varies by state but between 3 years and 25 years are needed depending on the circumstances. Its longer if the original owner is paying the taxes shorter if the squatter is paying the taxes. However all it takes is to watch properties. Perhaps a new business for folks in the real estate game, to be paid to stop by reo’s once a week and check up on them.
I have heard about enough of banks screwing the borrowers. I have closed a number of real estate deals in the last decade. Every one that I was the seller on I attended the closing at the title company. I witnessed the title agent explain in full the terms, amounts, and implications of the mortgages that the buyers were signing. There was plenty of time for the borrowers to research the deals that they made. And bottom line, it was the lender that wrote a big check. It is a failure of the legal system in this country that allows the clear title and right of possession of real property to be clouded by claims such as this. If a deed is recorded with a note copy in full with signatures, it should stand as evidence of indebtedness. And if a claim of default is entered and not refuted with in a 60 day period, title to the property should pass to the lender. Dead beats suck…..
I would not be at all surprised if Mcclung is delusional. This bubble has left a lot of badly hurt and angry people and there are many who share the blame. The MERS situation is a mess that will either resolved with force majeure or a heck of a lot of quiet title actions. Once the chain of title is broken,oh boy.
Thinking about something slightly less cuckoo, what do we think of the following idea by Bill Gross of Pimco:
http://www.huffingtonpost.com/2010/08/17/bill-gross-mortgage-refi-_n_685228.html
Personally, I like it — you offer the refi only to those who have kept current on their govt-backed mortgages (so it’s a reward for people who have sucked it up and acted honorably). You presumably lean on e.g. JP Morgan Chase, etc, to perform the actual refis, but they should be willing to do it because the refis remain backed by the Feds, so they’re not taking any incremental risk. Fannie/Freddie end up with the same exposure to the same real estate as they did before — but default risk has gone down because monthly payments have dropped so homeowners are likelier to keep paying.
And consumers end up with a lot more money in their pockets, which they can spend on other things, which presumably will help the economy too.
This seems like something they should do and do as quickly as possible.
Oh, I should add — the refis should NOT be cash-out!
Re #6 unless the adverse possession clock has run out these folks don’t have much of a leg to stand on. It just takes court and sheriffs time to evict them. Since they don’t have evidence of a clear title unless the foreclosed person signed a deed to the person. Without that there is nothing in the court house, these folks are like the folks of the republic of texas who say the annexation was invalid and challenge the state and federal governments, in this case the Texas Rangers got them.
The issue of course is exactly who is the current owner to file suit against the folks and get the sheriff to evict them. If people pay any attention to the properties adverse possession will not run and the squatters will be evicted. Its just a bother.
“These people need to be stopped,” he said. “How long are we going to let this go on?”
Boo Hoo Hoo. Isn’t that the pot calling the kettle black?
#7 Maybe I’m being overly negative in my outlook but refinancing a home that isn’t done falling in value doesn’t seem like an action that the lenders or the borrowers are going to want to engage in. As an underwater homeowner maybe I have nothing left to lose (my equity is gone anyway) but it would seem psychologically pathetic to me to inflict huge fees associated with the refi when I have no real idea what my house is really worth at this point. I know Gross wants to “do” something but the market has to set the real price before plans can be made. This is one of those feedback loop situations.
Oops…I meant to say “for example IF I was an underwater homeowner”.
I made a 60 percent downpayment to a 15 year fixed loan. If I go underwater then my neighborhood has really gone down the drain :).
Remember the 32,000 sf megamansion, “Dean Gardens”, which recently sold after 15 years on and off the market in the Atlanta area? Here’s an update: http://www.cnn.com/2010/LIVING/08/22/georgia.mega.mansion/index.html?hpt=C1
And a quote from Dean at the end of the article: “I grew up in a room with four rooms, the happiest kid you’ve ever seen and now I want to go back to a four-room house.”
Making this out to be moral or immoral seems like a waste of personal energy. These squatters are just the flies at a picnic where there is too much raw hamburger sitting around. Put the hamburger away and the pest problem will take care of itself.
Of course referring to history, before the homestead act there were various preemption laws where if you squatted on federal land that had not yet been opened for sale. When the land opened for sale you got the first right to buy the land. It was a major subject of argument before the civil war. So squatting is as American as apple pie. But the laws define it clearly how to get adverse possession.
That’s a great quote, Susie.