The website, “ZEROHEDGE” is very respected economics website, heavily populated by very, very intelligent people. On the site, you’ll find analysis about 10 times deeper than even very respected national news sources like Wall Street Journal and about 100 times deeper than your local paper.
You really must read today’s post. I’ll get you right to the punchline…..
“We’ve all been lied to and robbed by the banks, stop paying your mortgage.”
This is, quite frankly a terrifying concept, but this detailed article provides very strong support for this argument….not just for those who cannot make their mortgage payment, BUT EVERYONE IN AMERICA. Now, forget about the ballot box, ignore the polls, if you want to start a revolution…..sit home and don’t send in mortgage payments. The possibility that the general public’s disgust with their elected leaders, social and economic order and court system in general lead to such a revolutionary development is a possibility that concerns me gravely.
I’m fearful of this even if this country just keep skidding along the way it is….I’m even more terrified of what happens if there is another 2008 type crash or some other internal or external, man made or natural event that destabilizes our very precarious social, political and economic order. Strip everything else aside and if people aren’t working…in real jobs…with expanding pay and expanding opportunities and growth, then crisis is inevitable. My real fear is I see nothing….ABSOLUTELY NOTHING that suggests this country is heading in a direction that addresses these key problems.
We are not retooling and retraining like Germany. We are not attempting austerity like Great Britain. We are not fueling radical entrepreneurship like Latin America. America is throwing money at the White Collar Criminal Oligarchy that has destroyed this country.
This Zero Hedge article touches on an area that I’ve been chewing on intensely over the last several months….providing a true and legitimate legal basis for “strategic default”. I’m still not to the point where I can support just not paying a mortgage, despite the growing body of support for this…despite the overwhelming body of evidence that the big shots to whom all of America is making their mortgage payments engaged in, if not crimes, then gross incompetence. Despite case after case that shows that banks cannot show their right to collect mortgage payments.
The Legal Argument Against Making Mortgage Payments in Florida
When a homeowner takes money from a bank, he has a legal obligation to make payments to the party that he borrowed the money from, but here’s another thing:
The duty of a maker of a negotiable note to see that the person to whom he pays it has it
in his possession before making the payment.
Read that carefully, it says, “Before making a payment, the homeowner has a duty to make sure the person he’s paying has the promissory note in his possession”. That’s not me talking, that’s the Florida Supreme Court. Now granted it’s a 1912 case, but it’s still good law! (click here for the case and post) . And the Supreme Court Spoke and Said:
When it comes to the payment thereof, the rights of the parties thereto, as well as of third persons, are governed by the rules relating to negotiable paper; in other words, payment to any one other than the holder of the negotiable instrument is at the risk of the payer, and is binding upon the holder of the paper only where express or implied authority to receive such payment is established by the person making the same. Payment of a negotiable note secured by mortgage by the mortgagor or his grantee, where made to the original mortgagee who is not In possession of the note and mortgage, is not binding upon an assignee thereof before maturity who was In possession of the papers at the time of payment, unless he had expressly or impliedly authorized such payment. Smith v. First Nat. Bank of Cadiz, Ohio, 23 Okl. 411, 104 РаÑ. 1080, 29 L. R. Л. (N. S.) 676, and authorities cited in notes, 138 Am. St. Rep. 850.
And the thing is, this concept is found in our current version of the Uniform Commercial Code which governs most Mortgage Notes under the section titled, “Presentment”. The language is dense, but the concept is simple (read the language quoted above). And now back to several important quotes from ZeroHedge:
Although it took only 8 words to say what took us just about 6,000 in our last article to say, and although it came about 7 months after our initial article, the unmistakable words ” “¦the ownership of your house is in question“ finally had emerged in main stream media.
In fact, given the gravity of the question over clear title, the only seemingly prudent thing to do is to suspend mortgage payments, weather you can afford them or not, and to instead place those funds into a private escrow account, as we had previously advised.
If there is a serious and legitimate dispute over ownership, which has now been well established for about 60 million properties and some 7 trillion in securitized mortgages, why would you give up your legitimate claims? Perhaps you would do this only if you did not realize just how legitimate your claims are (default or not), and how illegitimate theirs are, because after all it is not the topic of the many phone conversations with your servicer.
It is unlikely that marketable, fee simple, insurable title can be obtained as a result of fulfilling the obligations of the related promissory note. On the contrary the titles to some 60 million homes in America are badly clouded.
I think the idea of stopping payment and putting funds in a private escrow account is mathematically unsound.
The large part of most payments is for intrest.
If, instead of making your payment, you put your 1,000 monthly payment in an intrest baring escrow account, you might earn about $1 a month. (If you are lucky and find an escrow account that pays as much as 1%).
Mean while your $200,000.oo mortgage is acquiring compound intrest at a rate close to $1,000 a month + late fees. The amount of intrest will go up each month because it compounds when no payments are made.
If you later find the mortgage holder is able to present or re-establish the note, (which happens more often than not), the funds you put in the escrow account will be MUCH less than the balance now owed.
Put it this way, if you owe them 5% on a $200,000.00 mortgage, stashing away a $1,000 a month at %1 or less is just not going to keep up.
There are more sane legal strategies for calling their bluff, ranging from a QWR to an action to Quiet Title (if the public records don’t reflect who may be the current note holder). Strategies which don’t put you in an automatic mortgage default. Strategies that make mathematical sense.
The other mathematically sensible strategy is strategic default, but that is a separate issue all together. In that case you are deciding not to throw good money after bad, and give the property up to start fresh somewhere else. In that case the only thing at left to resolve is avoiding a deficiency judgment, maybe in exchange for keys.
THANK YOU, MATT, for posting this very important information. To my way of thinking, this is the cornerstone of our defense. While I have read that you dismiss the Homeowners Revolt 90 day program, their use of the UCC code and Presentment seems to be valid, given what I read from this post. And it only makes sense…how can we continue to pay one entity who claims to be the note holder when, in fact, it may not be? Wouldn’t it make sense that the “debtor” would want to confirm his payments are going to the legitimate note holder? Particularly in this age of assignments and securitization? And legally, we have a right to know if there was, in fact, any REAL funds put up for the loan and that there was no fraud perpetrated in transaction of the loan…seems borrowers have several avenues of proactive offense as well as defense that we must stand on, or we will continued to be swindled by the currently all-powerful banking, corporate, and Wall street interests.