Comedian Lynn Moore and her husband, retired pro wrestler “Cougar Jay,” were on the verge of losing their St. Augustine, Florida, home when PNC Financial Services Group Inc.’s foreclosure hearing was canceled last month.
Moore, who runs a comedy club under the stage name Jackie Knight, and her husband, whose real name is Dion, last made a mortgage payment in mid-2009. She said they need to stay put until at least January, when Dion, 50, expects to receive a federal education grant they can use to rent a new home.
They are among the hundreds of thousands of Americans who dwell in the limbo between homeownership and eviction as banks and courts sort through foreclosure cases. Questions over the legitimacy of mortgage documents used by banks such as Wells Fargo & Co. and Bank of America Corp. have triggered litigation nationwide. As a result, foreclosure proceedings have been delayed, buying time for homeowners in default.
“If they tell me I have to be out before then, I’m going to be in big trouble,” said Moore, 63, who has faced foreclosure since March and tried to negotiate lower payments. “I’m going to have no money and no place to go.”
The delays mean people like Moore, who inherited her mother’s house and the $2,200-a-month mortgage payments that came with it, are lingering in their homes for free and longer than would be possible otherwise, in some cases for years, as lawsuits drag on.
“It’s a slow-moving animal and, in the case of foreclosures, there are a multiple of defenses to a foreclosure action,” said Chae duPont, a Miami attorney who defends homeowners and hosts a radio show about mortgage law.
Some homeowners, like Moore, aren’t contesting their foreclosures and expect to leave when their homes are seized. Some are holding out for loan modifications, while others vow to defeat the banks’ claims on their homes.
Homeowners who have failed to pay their mortgages and then fight foreclosure are only delaying the inevitable while threatening the housing recovery, said John Courson, president of the Washington-based Mortgage Bankers Association.
“The fact that they’re in default, to the extent that the loan has proceeded to foreclosure, is an indication that likely any attempt they’ve made, or lenders have made to assist them, have not been successful,” Courson said. “The end result is still going to be the same, unfortunately.”
Delays Add Costs
The delays just add to the cost of foreclosures for banks’ mortgage-servicing operations, he added.
“These houses, the longer they’re off the market, the longer values stay down, the longer the inventory stays out there and the longer the process gets dragged out,” Courson said.
About 1.2 million homes in the U.S. are in foreclosure, according to RealtyTrac Inc., which compiles foreclosure data. Homeowners are living in about 840,000 of those properties, the Irvine, California-based company estimates.
Home seizures in the U.S. fell 9 percent in October from the previous month, the biggest decline in a year. In the 23 states where the law calls for judicial proceedings, the average foreclosure takes 271 days, compared with 147 in 2006, before the housing bust, RealtyTrac said.
Complaints of defective documentation in foreclosure cases, including misdated and improperly notarized paperwork and faulty mortgage assignments, have prompted more homeowners to challenge seizures, according to Florida homeowner attorney Mike Wasylik of Ricardo, Wasylik & Kaniuk PL.
Karen Pooley, 48, of Seattle, hired a lawyer in August to fight foreclosure on her second home, where she lives, just days before a scheduled Aug. 27 sale. The case, in which Pooley claims documents were improperly transferred, is in litigation and there’s no sale planned, she said in a phone interview.
Pooley sued Charlotte, North Carolina-based Bank of America and Quality Loan Service Corp. in Seattle’s King County Superior Court to stop the foreclosure. The companies have no lien on the property and don’t have a right to seize the home, she said in the complaint. Pooley is also alleging violations of Washington state’s Fair Debt Collection Practices Act.
She bought the 92-year-old house, which she described as a “two-bedroom shack,” in 2006 for about $400,000. She said she planned to build a new house on the lot and sell it, expecting to make about $250,000. Pooley said she planned on using some of the proceeds to pay off the mortgage on her other Seattle home and save the rest for retirement.
Then the housing market crashed and she lost her job.
Pooley, who stopped paying the mortgage more than a year ago, is renting out her first home, which isn’t in foreclosure, and can’t move back because she said she can’t afford its $2,600 monthly mortgage payments. She contributes about $800 to that mortgage and the rental income covers the rest, she said.
“If I lose, I will lose everything I’ve worked for,” she said. “This house has been nothing but misery.”
Jumana Bauwens, a spokeswoman for Bank of America, declined to immediately comment. A representative of Quality Home Loan Service didn’t return a call.
When judges throw out foreclosure cases, homeowners can try to wait out the statute of limitations, which in Florida is five years, Wasylik said. The law gives a bank a five-year window to file a successful foreclosure action. After that, lenders are blocked from foreclosing, the lawyer said.
Some homeowners seek to negotiate loan modifications, continue making payments and stay in their houses, said Wasylik. Those in default after a trial modification may argue they were misled by banks, making it easier to reach a settlement that leads to a permanent modification, he said.
Other homeowners aren’t interested in saving their house, he said. They want to negotiate a deed-in-lieu of foreclosure, which gives up the property in exchange for a release from all obligations under the mortgage, Wasylik said.
“It’s not like a life of luxury waiting and wondering whether you’re going to lose your house any minute,” the attorney said. “You’re not writing a check every month, but it’s not a lifestyle anybody would be jealous of.”
Ron Gillis, 46, has chosen to make a stand, disputing the notion that he’ll ever be forced out of his of Port Charlotte, Florida, home. Gillis, who made his last mortgage payment in September 2007, said in a phone interview that he was expecting to lose his house when he received a foreclosure notice in January 2008.
After returning from a temporary job as a subcontractor on a Federal Emergency Management Agency project in Texas in the fall of 2008, he said he found what he called irregularities in the transfer of his mortgage between financial institutions. Gillis, doing his own legal work, is appealing a judge’s ruling rejecting his request to dismiss Deutsche Bank AG’s foreclosure case.
As the three-year anniversary of his foreclosure notice approaches, Gillis, who once was packed up and ready to move, said he plans to stay put. He said he can beat a foreclosure lawsuit and never make another mortgage payment.
Once valued at about $200,000, his property is now assessed at about $66,000, Gillis said. Deutsche Bank claims he owes $184,169, he said.
“I’ll take as long as it needs to take,” he said. “I’m not going anywhere.”
Scott Helfman, a spokesman for Frankfurt-based Deutsche Bank, declined to comment.
Moore, the St. Augustine comedian, isn’t contesting her foreclosure and can’t afford an attorney. Even without paying their mortgage or property taxes, the couple hasn’t been able to save money because Dion, who in his days as Cougar Jay grappled with wrestling luminaries including Ric “The Nature Boy” Flair and Dusty Rhodes, was seriously injured in a car accident.
Fred Solomon, a spokesman for Pittsburgh-based PNC, declined to comment on their case. PNC in October suspended most of its foreclosures while it reviewed its procedures, he said. The review is continuing as new foreclosures proceed.
“It’s hard being a comedian and running a comedy club with all this going on,” Moore said. “I’m crying all the way to work. Then I have to be funny.”
She’s due back in court in January and a trial is set for February, according to a court order. Meanwhile, she said she decorated her house early for the holidays.
“I never in a million years thought I’d still be here this Christmas,” she said.