View Full Version : Imminent foreclosure home owners leasing to eachother to stop foreclosure

21st December 2010, 03:05 AM
The Sum Of All Eviction Fears…”Families Exchange Homes to Stop Foreclosure.” (http://foreclosureblues.wordpress.com/2010/12/16/the-sum-of-all-eviction-fears-families-exchange-homes-to-stop-foreclosure/)

Posted on December 16, 2010 by Foreclosureblues

BLOG VIEW: While scanning mortgage headlines the other morning, I was stopped in my tracks by one particularly eye-grabbing claim: “Families Exchange Homes to Stop Foreclosure.”

Immediately, I recalled a story that made the rounds last summer. You might remember the one: While cleaning out their home, a family facing foreclosure found a highly valuable Superman comic book – Action Comics No. 1. That comic – apparently a collector’s dream item – was later auctioned for $436,000, leading to a bevy of “Man Of Steel Saves The Day” headlines (but, sadly, no “Faster than an affidavit notarization, more powerful than a foreclosure locomotive on a dual track” ledes).

“But what’s all this about swapping homes?” I asked myself as I dug into the press release.

As it turns out, the release was touting a new (and free) service being offered by an entity known as Home Lease Exchange LLC. In addition to boasting offices in Phoenix and San Jose, Calif., Home Lease Exchange appears to be the creative force behind the ForceYourLenderToModify.com – a domain name that doesn’t exactly conjure up thoughts of compromise, good-faith negotiating, etc.

Here’s how Home Lease Exchange’s new service works: A borrower whose foreclosure is drawing near leases – under very generous terms – his or her home to another borrower who (a) lives nearby and (b) is also facing foreclosure. The long-term lease will deter buyers at trustee sales, leaving the servicer and/or bank to deal with the REO and its tenants, Home Lease Exchange explains.

According to the release, this plan “creates amazing leverage for homeowners with their lenders, because under President Obama’s Helping Families Save Their Homes Act, tenants have the right to stay in their homes through the term of their lease, as long as the lease is entered into before complete title to the property is transferred.”

The Helping Families Save Their Homes Act, which passed in May 2009, included the Protecting Tenants at Foreclosure Act (PTFA). Created in response to the rare but nonetheless unfair situation where a tenant is kicked out of his home on little notice because his landlord stopped paying the mortgage, the PTFA was designed to give tenants some breathing room between learning of his landlord’s foreclosure and securing new living accommodations. Under the PTFA, servicers must abide by the terms of bona-fide leases or, where no such lease exists, provide a 90-day grace period for tenants.

The PTFA was immediately met by trepidation on the part of servicers and eviction specialists. Giving servicers cause for concern were the legislation’s vague language, questionable cutoff points and definition of bona-fide leases.

For months following the PTFA’s passage, eviction-themed webinars and industry panel sessions dealt with worst-case scenarios, such as the dreaded 10-year verbal lease entered into between a borrower and his brother. The PTFA, well-intentioned though it was, clearly put servicers in a precarious spot.

Making things more difficult was a PTFA amendment included in this year’s financial reform legislation that essentially allows borrowers and tenants to enter into leases up until the point at which complete title to a property is transferred to a successor entity.

“Therefore, the Dodd-Frank Act opens the door wider than before to potential fraudulent leases or tenancies, under which straw-man tenants or others are used as a strategy to significantly delay the REO owner from recovering possession of the property,” Larry R, Rothenberg, a partner at Weltman, Weinberg & Reis Co. LPA, wrote at the time. “‘Strategic renting may now join ‘strategic default’ as a term in our lexicon.”

Perhaps to the surprise of much of the industry, abuse of the PTFA has been limited to one-off events, eviction attorneys told me as recently as last week. Yes, suspicious leases come up now and then, they say, but by and large, the issue of fraudulent leases hasn’t been nearly as bad as was originally feared.

Will Home Lease Exchange be the galvanizing force that turns eviction departments on their heads?

21st December 2010, 06:21 AM
Interesting tactic but whenever I hear about these things I wonder what the end goal is. The borrower is just going to be on the hook for all these unpaid payments in addition to the payment they already can't afford. So they delay foreclosure while their debt goes up? Delay foreclosure while the price of the house falls even more? Probably their actions are based on false hope where the likely case is that they're just getting in deeper.

21st December 2010, 11:54 AM
Ash, when the mortgage payments stop, and the foreclosure process begins and works through to completion where title is changed to the creditor who held the mortgage, the missed payments leading to and through the foreclosure process are not owed. The bankster/entity takes title to the property, and the mortgage agreement is consummated (generally speaking). A tenant (as opposed to the former owner) living in the property, with a nice long lease at a great price, is another matter entirely, game on!

21st December 2010, 01:03 PM
If not the payments, then isn't the borrower on the hook for the difference between what they owe and what the bank ends up selling the house for? I thought it was that way in most states. Although if they weren't upside-down (or close to it) on their mortgage then maybe this would be a good loophole.

21st December 2010, 01:37 PM
If not the payments, then isn't the borrower on the hook for the difference between what they owe and what the bank ends up selling the house for? I thought it was that way in most states. Although if they weren't upside-down (or close to it) on their mortgage then maybe this would be a good loophole.

this is where my "generally speaking" caveat came in above. My understanding is that the banksters can only come after the owner for the diff in a minority of states, not most, and you'd have to DYODD on your jurisdiction. These stem from the Great Depression (1930s, not this one) era laws, the last great foreclosure tidal wave, engineered by the same bankster cabal. This is why stategic defaulting has been exploding in popularity (http://gold-silver.us/forum/general-discussion/cbs-60-minutes-mortgages-walking-away/msg42838/#msg42838) (encouraged by the bankster/MSM with a new endgame in play this time-- also see Agenda 21 For Dummies (incl: abolition of private property) (http://gold-silver.us/forum/general-discussion/agenda-21-for-dummies-(incl-abolition-of-private-property)/msg107446/#msg107446)).

'Sides, the foreclosed-upon are generally insolvent (strategic defaulters excepted), can't get water from a stone..

Banksters have no worries about the difference in loan balance vs sale price- after all they loaned out the paper fiat conjured out of thin air, at interest, for a "real asset" they didn't build or ever own, and in the end, the got title to & possession of the real asset. Nice work if you can get it. Banksters aren't even in any apparent hurry to liquidate their REOs, look up "shadow inventory".

Twisted Titan
29th December 2010, 08:17 AM
No matter what happens if you are not paying up ........all you are doing is circling the wagons until the next leg up in evictions takes place

The best strategy is to create whatever legal smoke screen you can for as long as you can using every appeal that you can.


That is the key........ that is how you get ahead.

Full on repudiation but the with daft manuerving of the saved financial funds.


29th December 2010, 08:35 AM
There is no debt. There is no money. The only thing that gives power (and by that they derive authority) to the banker is the lawyers, the court system, the sheriff, the government. It is all smoke and mirrors. Go back and watch the Wizard of Oz about 20 times and figure out how to remove yourself from the Cinemescope world to the black and white world of reality.

Land is a three dimensional entity. Your property is contained within this 3-d space. If it is anchored in a township, range or lot then you are only a tenant. Write the deed to LAND in terms of metes and bounds with the starting point a lat. and long., erect your stone monuments, give public notice, and record the affidavit rather than the deed. Get out of the government system entirely. Let them have their PROPERTY while you take possession of the land (which includes anything attached to the space).

There was no loan or mortgage (there is no spoon).