Re: At Legal Fringe, Empty Houses Go to the Needy

The funny thing (and scary thing) is that the original mortgages (and 2nd
& HELOCS) on these homes are either still held on banks balance sheets for
their original values, or have been sold to Fannie or Freddie Mac
(taxpayer) for 100% of their value.   The losses still haven't been taken,
but the banks are being propped up with $$$ from the Fed Reserve.

regards,
-Lance



> Bruce Geerdes
> http://www.nytimes.com/2010/11/09/us/09foreclosure.html
>
> At Legal Fringe, Empty Houses Go to the Needy
> By CATHARINE SKIPP and DAMIEN CAVE
>
> NORTH LAUDERDALE, Fla. — Save Florida Homes Inc. and its owner, Mark
> Guerette, have found foreclosed homes for several needy families here
> in Broward County, and his tenants could not be more pleased. Fabian
> Ferguson, his wife and two children now live a two-bedroom home they
> have transformed from damaged and abandoned to full and cozy.
>
> There is just one problem: Mr. Guerette is not the owner. Yet.
>
> In a sign of the odd ingenuity that has grown from the real estate
> collapse, he is banking on an 1869 Florida statute that says the
> bundle of properties he has seized will be his if the owners do not
> claim them within seven years.
>
> A version of the same law was used in the 1850s to claim possession of
> runaway slaves, though Mr. Guerette, 47, a clean-cut mortgage broker,
> sees his efforts as heroic. “There are all these properties out there
> that could be used for good,” he said.
>
> The North Lauderdale authorities, though, see him as a crook. He is
> scheduled to go on trial in December on fraud charges in a case that,
> along with a handful of others in Florida and in other states, could
> determine whether maintaining a property and paying taxes on it is
> enough to lead to ownership.
>
> Legal scholars say the concept is old — rooted in Renaissance England,
> when agricultural land would sometimes go fallow, left untended by
> long-lost heirs. But it is also common. All 50 states allow for
> so-called adverse possession, with the time to forge a kind of
> common-law marriage with property varying from a few years (in most
> states) to several decades (in New Jersey).
>
> The statute generally requires that properties be maintained openly
> and continuously, which usually means paying property taxes and
> utility bills.
>
> It is not clear how many people are testing the idea, but lawyers say
> that do-it-yourself possession cases have been popping up all over the
> country — and, they note, these self-proclaimed owners play an odd
> role in a real-estate mess that never seems to end. Though they may
> cringe at the analogy, as squatters with bank accounts, these adverse
> possessors are like leeches, and it can be difficult to tell at times
> whether they are cleaning a wound already there, or making it worse.
>
> Either way, Florida is where they thrive.
>
> Many residents of the Sunshine State have grown accustomed to living
> beside a home left vacant for years. Now hundreds of these mold-filled
> caverns, their appliances long ago spirited off, are being claimed by
> strangers.
>
> “There are all kinds of ways the people try to manipulate the system
> to their own financial gain,” said Jack McCabe, an independent real
> estate analyst with McCabe Research and Consulting. “And you are going
> to see it here because Florida is the capital of real estate fraud.”
>
> Mr. Guerette, who now faces up to 15 years in prison, insists that his
> business is legitimate and moral. He said he got started last year,
> driving around working-class neighborhoods in Palm Beach and Broward
> Counties, looking for a particular kind of home: not just those with
> overgrown lawns and broken windows, but houses with a large orange
> sticker from the county reading “public nuisance.”
>
> The stickers signaled owners out of touch: the county or city was
> unable to reach them.
>
> Mr. Guerette filed court claims on around 100 of these properties,
> which appear to be in the process of foreclosure. Then he chose 20
> that could be most easily renovated and sent letters to the owners and
> their banks — presumably overwhelmed — to make them aware of his
> plans.
>
> Florida does not require notification. One state lawmaker tried and
> failed to close that loophole last year with a bill that never passed.
> But it hardly mattered. Nineteen of the owners and their banks did not
> respond, Mr. Guerette said.
>
> So he set about fixing up the unclaimed properties. In some cases, he
> just mowed the lawn and replaced stolen air conditioners or broken
> windows; in other cases, like with Mr. Ferguson, he let tenants make
> improvements in lieu of rent.
>
> At his peak last year, he said he managed 17 homes with renters, some
> of whom he found on Craigslist, others through a Christian ministry in
> Margate, Fla.
>
> Copies of leases show Mr. Guerette included an addendum noting that he
> was not the legal owner. Tenants like Mr. Ferguson and his family, who
> had been homeless before moving in last year and paying $289 a month,
> see Mr. Guerette as a savior.
>
> And neighbors generally agree. “There is no telling who was in and out
> of that house,” said Rawle Thomas, who lives next door to Mr. Ferguson
> and his family. “I like them, and I’d much rather have someone in
> there than the house empty.”
>
> In other cases, though, adverse possession has been more aggressive
> and problematic. In Palm Beach County, Carl Heflin spent a year in
> jail awaiting trial on fraud, trespassing and burglary charges. But
> after accepting a plea agreement and the rejection of his adverse
> possession claims, he was arrested again on charges of trying to
> collect back rents on houses he had tried to possess.
>
> “The whole time he was harassing us and threatened to burn the house
> down with my kids in it,” said Misty Hall, a single mother of two who
> rented a home from Mr. Heflin.
>
> Sam Goren, city attorney for North Lauderdale, said any benefits were
> outweighed by a simple fact that adverse possessors often overlook:
> they are trespassing.
>
> Michael Allan Wolf, a real estate expert at the University of Florida
> law school, said adverse possessors also disrupt the chain of title.
> Rightful owners end up having to evict tenants. The time between
> foreclosure and legitimate resale may be extended.
>
> Even when adverse possessors help stabilize neighborhoods, “It is not
> an effective or efficient cure for the foreclosure crisis in Florida,”
> Professor Wolf said.
>
> Mr. Guerette says his goals are more charitable. After several
> marriages, six children and some minor trouble with the law, he said,
> he is now a born-again Christian who sees his new company as a way to
> make an honest living, and solve a dire need.
>
> His tenants confirmed that after he was arrested in April, he told
> them they could stop paying rent. Even if he is not allowed to keep
> taking homes, he said, why should needy people not be matched with
> homes left to decay?
>
> “There are over 4,000 homeless in Broward, and the number is growing
> all the time,” he said. “I thought I could use these homes and put
> people into them. It could be a good thing.”
>
> He added: “It’s not rocket science.”
>
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regards,
-Lance


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