Strange times, strange solutions: Just stay put

Remember the guy in Florida who breaks into vacant foreclosures and matches them up with a homeless "house sitter"? Well, Ohio Rep. Marcy Kaptur is eliminating the middleman and urging troubled homeowners to just stay put. From the Toledo Blade on Saturday:

U.S. Rep. Marcy Kaptur (D., Toledo) is advocating homeowners threatened with foreclosure exercise squatter's rights in trying to stave off the loss of their house.

"I'm saying to them possession is 99 percent of the law; you stay in your house," Miss Kaptur said yesterday, continuing a crusade she started several weeks ago in Congress and CNN picked up Thursday night.

She said she believes that many so-called predatory and subprime loans -- those made to borrowers who did not qualify for a conventional mortgage -- may have been illegal.

She urged homeowners not to panic and leave their home just because they receive a foreclosure notice from their lender, and she said they should demand that the mortgage-holder produce a mortgage audit.

"I say to the American people, you be squatters in your own homes. Don't you leave," she said during a speech in Congress earlier this month.

Her advice is causing a flap in some corners. The Blade quotes Realtor Jim Moody, a Toledo mayoral candidate, as saying "This is goofy."

Her motivation?

Miss Kaptur said she started advocating that homeowners fight foreclosure by staying [in] their home after it became clear that the $700 billion bailout of the financial industry passed last year was not working as intended by Congress.

Well, she got that part right.

OK, we've seen a Florida "solution," now an Ohio version. It's probably just a matter of time before a Californian tops these. Hat tip to Luke Mullins' Home Front blog at U.S. News & World Report.

-- Lauren Beale

Thoughts? Comments?

Photo: Rep. Marcy Kaptur spoke during a rally at a Jeep plant in Toledo, Ohio, in December. Credit: Madalyn Ruggiero / Associated Press

Comments

[Renter in OC]

I could claim possession as 99% of the law and squat???? Think of all the things I wouldn't have to pay for, big screen TV, cars, anything purchased on credit. I'm liking the way this lady thinks!!!!!

[el guapo]

And so there is no blame assigned to the person who took out the loan? No one ever fudged their income on a loan? Sure the banks and others behaved shamefully, but what about personal accountability?

[MyLessThanPrimeBeef]

She said she believes that many so-called predatory and subprime loans -- those made to borrowers who did not qualify for a conventional mortgage -- may have been illegal.

------

Interesting...

In my humble opinion, a lot of the loans by China to America have been similarly ill-qualified. One might even call the practice predatory.

[JK]

The Old Me: "Who cares if these people are evicted? They should have known they didn't qualify for a $500K mortgage making $40K per year. They made it bad for the rest of us that had real down payments. Screw them!"

...and then there were the bank bailouts.

The New Me: "Help for Corporate America but none for the people they screwed? Stay in your home! These banks can't figure out who really owns it anyway! Screw them!"

[LA-renter]

Can someone please explain "losing" you home?

If you bought a home with a phony loan in the past few years and are now "underwater", how much could you possibly be "losing"?

The illusion of bubble values are gone (and will not return soon).

So, why hold out?

The government should offer to pay a troubled "owner" their original downpayment (adjusted for the percent loss of property value) to just walk away and end the agony.

Maybe this would satisfy the need to assist loan-owners.

[Nelcisco]

JK,

you nailed it.I understand personal responsibility el guapo but where's the personal reponsibility to the Golieth of the banking industry? Where did the TARP money go? Its like the good guys loosing the war on drugs because they have to play by the rules while the vermon criminal do whatever they want with impunity.

I can see if the squatters were speculators who bought their property as a hot stock, but according to the report Rep. Kaptur stated that the majority of the squatters are working families that are getting kick out of their homes, and I think there hasn't been enough emphasis on that fact, lets forget for a moment that many of them brought no skin into the game and they're underwater, well... most of us are looking at it from an investors point of view, LA-renter says end the agony.Why? Its shelter for their families, one may argue, they did the loan fraudulently, the lender commited the fraud not the borrower, when I do loans for my borrowers it was my reponsibility as a mortgage pro to DO THE RIGHT THING for people. I say Fu.. I mean, the heck with the banks, the rest of the TARP $ needs to go in bailing out the american people

[Nick]

You'd think it would be illegal for people in positions of authority, who clearly are (or should be) well-versed in the applicable law, to advocate actions which are clearly illegal. How about instead of investigating totally meaningless populist BS like doping in sports, Congress actually do their fricken job for once, haul this moron in front of a panel, and have her explain why she shouldn't be thrown in jail for encouraging people to openly break the law. So much for the "chosen one's" pledge to root out corruption...

[Mucker]

This makes real sense. But I think she has her sights set too low. For example how about the poor victim who buys stolen goods. Cars with falsified titles, Big screen TV's, Living room and bedroom sets, high end camera equipment, jewlery, the list goes on. Just keep it - after all it was the thiefs fault the rightful owners lost their property but that doesn't make it fair that the "victims "who paid real money for stolen goods should lose out - right?

[SoCalJim]

Politicians are idiots - no better proof of that than the past year (or eight years). These home "renters" didn't own anything anyway - is she encouraging crime / theft? Where does this sense of entitlement come from? I am utterly confused by their ignorance. Politicians are quite possibly the worst of the worst, and now three Obama nominees can't even pay their taxes??? What a bunch of jerks. To hell with them all, and I am sincere when I say that. The CA legislature is equally pathetic, if not worse. The only person with half a brain in CA is Arnold - he has done an amazing job working with people who are amazingly stupid and can't even work out a budget when we are many BILLIONS in debt. Same thing every year. Same idiots saying the same things. I guess the people here who vote them in are also to blame. Wake up people. Time to take out the trash and get rid of these morons.

[Laker]

I say Boxer, Finestein, and pelosi will come out with something like this:
Here in CA, every upside down home/loan owner will get his mortgage canceled and own the home out right by government paying off his loan. All the rest that put down 20% or more should send a check to the IRS to cover the losses to the poor buyers that put zero down.

- THIS is the best solution that would save majority of California home/loan owners as the majority today are underwater....

But now seriously, LA-renter you point out a good remark: "....losing you home..."
Then you add "...The government should offer to pay a troubled "owner" their original down payment...."
1) Those people put nothing down buying with 80/20 loans so they have nothing to lose, they never put any money into the house, they started with 0 equity.
2)I agree, since these loan owners put zero down, Let the government pay them ZERO and evict their buts out of those houses. If someone put 20% down or whatever, help them to refinance to get better rates and lower payments.

[Snacker]

Politicians are so out of touch with reality.

If you are completely underwater, put no money down on the home, and are being foreclosed upon, why fight tooth and nail to stay in a home, be threatened by big strangers trying to physically or legally kick you out, not to mention the public humiliation and the huge stress this will be on you and your family.

Why not just walk away? What do you have to lose? So you get a ding on your credit. That's going to happen no matter what. Go rent. Save up some money. By the time your credit is repaired, you'll have a fine downpayment for a new home and they will be cheaper on top of this. Not to mention a huge weight lifted off your shoulders.

There is very little incentive to stay in a home with little skin in the game unless you either an idiot or are glutton for pain.

[peter]

Go ahead and squat. Then it will unfold in the legal system and we will find out that the squatters are guilty of mortgage fraud and they'll get moved from the home to prison. IF YOU LIED ON THE APPLICATION AND STATED THAT YOU MADE MORE THAN YOU DID, YOU ARE GUILTY OF MORTGAE FRAUD!

[356man]

It's folks like Rep. Kaptur that remind me why so many people look upon Congress with either bemusement or utter contempt. I often wonder if we are just butts of an ongoing sick national joke.

[Steve]

Just reconfirms you borrow and stay in as much debt as possible you win. You save and invest in the stock market you lose.

[Inland Empire]

Possession is 99% the law? Yes, lets have lawmakers spread ignorance. As if there aren't enough morons on this planet.

[RZ]

Isn't this the same woman who was against the bailout last year because (to paraphrase) people were playing around and then began crying to mommy to make it better? What a turnaround. I'm disappointed.

[sheila]

lest we forget, Countrywide has actually admitted that they were the ones perpetrating fraud on the borrowers, not the reverse, and had to shell out $8 BILLION as a settlement, plus work out deals with the homeowners they intentionally and fraudulently steered into loans other than the ones the homeowners qualified for and thought they were getting. if people stayed in their houses, they get a new, fair mortgage. if they left, their compensation is much more speculative.

BofA bought Countrywide and is now using our tax dollars to cover the losses they knew they would incur from doing that, while refusing to lend to qualified borrowers because they are using all our money to acquire assets for themselves. another layer of fraud and deceit.

I totally agree they should demand a thorough mortgage audit before moving out. if theirs is one of the MILLIONS of fraudulent loans made by banks who knew they were ripping off borrowers, then they shouldn't have to go, and they lose most of their leverage and compensation if they leave.

everyone here is so eager to blame the homebuyers, but most of the fraud that's been uncovered by law enforcement and regulatory agencies was perpetrated by lenders and brokers, not borrowers. of course if the buyer is to blame, that should come out in the audit and then they have to go...

[Nick]

To Nelcisco:

Man, I'm tired of so many "informed" and "intelligent" people blaming the banks for taking billions of dollars in TARP money and paying it out to their insiders, or doing whatever else they want with it. It's not their fault the government gave them money, with no strings attached, for no intelligent reason, like an incoherent fiver year old having an epileptic fit and barfing up billion dollar bills exorcist-style. Yeah, it was and continues to be a gigantic waste of money... but you don't blame the homeless person for taking their "hard-earned" handouts and buying booze and cigarettes, and coming back to beg for more money the next day, unless you are the idiot.

Wasting money and paying out insiders is the big banks' natural behavior, and blaming someone for not acting against their nature is just dumb. If someone gave you a million dollars with no strings attached and then got mad if you didn't give it all to charity, that person would be an idiot. Yet Congress gave $700 Billion to the banks (both foreign and domestic) with no oversight and no strings attached, and then got mad when they didn't act against their nature. I mean, common... how dumb are people? Yes, there should be outrage, but please, people: direct your outrage at the people who handed the blank check drawn on the taxpayer to the addicts, not the addicts themselves. None of this abuse would have been possible without Congress writing a blank check: none.

Let this be an extremely costly lesson, then: whenever politicians and clamoring about needing to spend incomprehensibly large amounts of money on God-knows what as soon as possible to avoid unspecified but dire consequences, you should be very very wary; it's almost certainly a financial waste. Come to think of it, this lesson might come in very handy again very soon; I think I heard Obama clamoring again today...

[TC]

Say goodbye to the middle class.

We now see the Working Class become defaulters, squatters, the unemployed, and the credit ruined. The upper middle class become strapped by their negative equity, decimated 401k's and stock portfolios, and car loans. They hang precariously hoping their jobs are safe. Neither end of this spectrum is upwardly mobile and the burden will lie on those who can still pay taxes while struggling to get back to zero balance.

The perpetration of complete fraud from top to bottom, false wealth and the sense of security and easy cash.

Instead of jail time and prosecution, they will receive handouts and benefits. All of this on the backs of folks who played it straight.

The banks and the squatters deserve each other. And the idiot brokers who have not closed a loan in 6 months, well they got what they deserved.

[christopher]

to snacker: its really really hard to rent once your credit is dinged. maybe even harder than getting a mortgage. I'm with Ms. Kaptur on this one. Stay put and call your local TV news team if they try to kick you out of your home.

[Kathy]

Congratulations should go to former Treasury Secretary Hank Paulson for convincing the Congress that the money had to be handed over immediately with no strings attached, lest the country dive into a Depression. No one has said yet what was said in those secret sessions where he piled on the doom and gloom scenarios. And of course, a few months later he admits that he was wrong.

[Nick]

To sheila, and whoever else is under the delusion that banks are "refusing to lend to qualified borrowers because they are using all our money to acquire assets for themselves":

Banks are certainly acquiring assets for themselves (with bailout money) and paying out there executives and insiders while the can, but NOWHERE has it been shown that they are refusing to lend to qualified borrowers at market rates. The key there, of course, is what constitutes "qualified" and "market".

See, "qualified" is no longer "has a pulse and can fog a mirror", it now takes into account things like "has a job", "has a triple-digit credit score", and "could possibly repay a loan from earnings and not just appreciation"; qualifications which were missing during the bubble. Likewise, "market" doesn't mean "limbo down with the securitization party", it now includes things like "risk premium" and "gosh, we might have to hold this loan so let's try to make sure it at least keeps up with inflation".

Pretty much all banks, even the ones currently funneling your taxpayer dollars to their executives courtesy of Congress, are still lending money to qualified borrowers at market rates. Don't be one of the uninformed masses who is caught up in the outcry from Congress scum about banks not lending, who are trying to deflect criticism of their own actions with this BS populist rhetoric. Either complain about banks not lending to unqualified buyers at below market rates (which they accurately are not doing), or complain about Congress lying about what banks are and are not doing; parroting Congress' lies and distortions doesn't really help anything.

[MyLessThanPrimeBeef]

Kathy, with Paulson, it was his give away or martial law.

With Mzee Obama, it's his give away or a catastrophe of biblical proportion.

You can't say there is no change.

[Nick]

"Congratulations should go to former Treasury Secretary Hank Paulson for convincing the Congress that the money had to be handed over immediately with no strings attached, lest the country dive into a Depression."

Totally agree, if by "congratulations" you mean blame. Equal or greater blame should go to the Congress for allowing such an atrocity, though: after all, it's their job to evaluate such claims on their merits (or lack thereof), and hold the purse strings on behalf of the taxpayers. Also, an equal amount of blame should be heaped on any other executive who asks Congress to allocate a similar amount of money for wasteful spending without oversight, say for example the second half of the TARP debacle (hint: his name rhymes with "Blowbama"). Oh, and the same amount of blame and ridicule to anyone else in the executive branch who tries to swindle, say, a Trillion dollars out of Congress for special-interest projects under the premise of "must act now", "direst of consequences", "preventing a catastrophe", etc. (hint: his name rhymes with "yomama"). Plenty of blame, corruption, and misdeeds to go around...

[MyLessThanPrimeBeef]

Nick, whoever you are talking about, he's far from 'the only fear we have is fear itself.'

Very far from that.

On that note, I better go prepare for the coming catastrophe.