From Bloomberg:
In 2002, an accountant in Boca Raton, Florida, named Joseph Lents was accused of securities-law violations by the U.S. Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice- recognition software company, had sold shares in the public company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage.
The loan servicer, Washington Mutual Inc., tried to foreclose on his home in 2003 but was never able to produce Lents’s promissory note, so the state circuit court for Palm Beach County dismissed the case. Next, the buyer of the loan, DLJ Mortgage Capital, stepped in with another foreclosure proceeding. DLJ claimed to have lost the promissory note in interoffice mail. Lents was dubious.
“When you say you lose a $1.5 million negotiable instrument — that doesn’t happen,” he said in an interview in Bloomberg Businessweek’s Oct. 25 issue.
DLJ claimed that its word was as good as paper. But at least in Palm Beach County, paper still rules. If his mortgage holder couldn’t prove it held his mortgage, it couldn’t foreclose.
Eight years after defaulting, Lents still hasn’t made a payment or been forced out of his house. DLJ, whose parent, Credit Suisse Group AG, declined to comment for this story, still hasn’t proved its ownership to the satisfaction of the court. Lents’s debt has grown to about $2.5 million, including unpaid taxes, interest and penalties.
Ooof. This is going to be a fun ride.
Deadbeat Deadbeat Deadbeat
Interesting note at the bottom about how he hasn’t been paying either his mortgage or his taxes. If the mortgage company can’t prove they have the proper documentation, then the state should eventually end up with his house due to the unpaid taxes, right?
I’m with math….skiming out of on the mortgage payment because the bank can’t find the note is one thing.
Failing to pay property taxes is a whole other matter and just makes him a dick and a deadbeat.
Sadly, this story is going to encourage a lot of other people of the same ilk to try and play chicken with their bank, some might win a free house out of it, but most are just going to overplay their hand. Greed is like that.
Art – Speaking of ‘overplaying their hand’ vincent jackson agreed to an offer to return to the Chargers yesterday that is paying him $225+/-k.
He turned down their offer in the spring for $3.25mm!!! To paraphrase JTR: “He was priced to sit.”
Same foolish mentality in sports agents as listing agents.
“DLJ claimed that its word was as good as paper.”
Currently:
Hope & Change
I will end the Afghanisatan war and bring troops home.
No new taxes for anyone making less than $250K
Past:
Weapons of Mass Destruction
Yellow cake uranium
I did not have sex with tha women
I did not inhale
Read my Lips, No new taxes
I am not a crook
Extra Credit:
I’ll stop if it hurts
Houses only go up
You can always refinance before the balloon note is due
Buy NOW or be priced out forever
What’s the F-ing Difference?
Good for this Guy, just another hard working American trying to make a living. We should all be so smart.
Land of the Free, Home of the Brave? I think not.
Seriously why hasn’t Palm Beach County where Lents lives taken back the house for eights years of unpaid property taxes? Is it just because the mortgage company can’t prove proper documentation (so no foreclosure yet) and they don’t want the headache? In my county where I live on the Central Coast, the limit is three years for unpaid property taxes. Eight years is a ridiculously long time…
Susie – Florida is a very popular state for Tax Lien Certificates paying apx 18% (lower based on the actual auction/bidding).
Seems highly likely that the county got its money from the tax certificate sale and the investor just waits it out and ultimately collects their statutory interet rate when the home is ultimately foreclosed upon with relatively minimal risk (taxes paid before the loan).
DLJ doesn’t own that mortgage – I do! I just, uh, lost the papers somehow. But you have my word, I’m the owner, and that’s as good as having the paper!
…
It’s pretty ridiculous when I do it. So what’s the difference?
Clear Capital™ Reports Sudden and Dramatic Drop in U.S. Home Prices:
“This special Clear Capital Home Data Index (HDI) alert shows that national home prices have declined 5.9% in just two months and are now at the same level as in mid April 2010, two weeks prior to the expiration of the recent federal homebuyer tax credit. ”
Looks like this is a good index: repeated sale, rolling four month, price-per-sf method. Real meat: it updates daily. It is not as good pending price tracking if possible, but it is probably as good as we can get.
Disclaimer: I am an optimist: Since the “tax-incentive” induced gain has been wiped out mostly, if we find motivated sale in the coming winter slow days, happy low ball and get it all! Didn’t Jim said “it seems waiting does not buy you much more”
jim – i worked for a fortune 25 company decades back and we sold equipment that costs between $35-$100,000. when we financed the purchase and the customer defaulted, the law stated we had to provide the actual signed paper contract in court to repo the equipment…
it was massively expensive to store millions of paper contracts so we turned them into microfische and destroyed the original contract. the percentage of defaulted customers that demanded a contract in court was small so it was cheaper to ‘give away’ X number of units a year rather than pay storage.
we had our sales reps tell customers how to game us in court…
also we had problems with landlords holding our abandoned equip hostage because we couldnt produce a paper contract.
same thing happeing now with the banks….
Florida seems to e one messed up place right now,
I have not heard of anyone getting a free house this way in California yet.
I would imagine this would be a very rare in SoCal that this would actually work.
It’s unfortunate that it has to be a deadbeat mortgage nonpayer who benefits from the paper snafu, but under what conditions would mortgage payers who are not in default ever discover that their lender couldn’t produce the note? The unpaid taxes are another matter, but I presume that just results in liens that are collected if/when the property eventually changes hands.
Give the guy some credit. He outlasted WAMU.
A. The law was different back then; original ink had to be produced. Since then, the law has changed — certified facsimiles (microfiche, photograph, digital scan) are now acceptable. It’s why your bank can now digitize your canceled checks.
B. What were you selling for $100K a pop that generated millions of contracts?
Hey Kids!
Want to earn some extra money over the summer? Would you also like a chance at a Big Jackpot?
Sign up for NoteFinders today!
“Hi! I’m Thurston Walker Heatherington-Poole III — your local banker! — and I have a problem. Thanks to the economic catastrophe caused by the Democrats over the last ten years, I’ve mislaid some important paperwork. I’ve looked everywhere I can think, but I can’t find it. Would you like to help?
“We’ll show you how to look, where to look, and what to look for. You’ll even get to wear a sharp-looking uniform. You’ll be paid hourly, whether you find anything or not.
“But if you do find one of the missing notes, and it’s a qualifying(*) note worth $500,000 or more, you’ll get 1% of the face value as a reward for helping get my important paperwork back in order! That’s at least $5,000! Just for finding one piece of paper!
“So why not give me a hand, so I won’t have to blow up the American economy.”
Don’t delay, kids! Call 1-800-CLUSTERFUCK and sign up for NoteFinders today!
(Note: This is entirely the product of my furtive imagination. So far…)
Just another cheese lover.
Wow, this seems like a pretty good blueprint for somebody to get a great situation: buy a mansion and get the promissory note ‘lost’. After that, it’s all gravy.