Sister Wives and the American Foreclosure Fraud Housing Crisis: It's Not Over.

Sister Wives.  Have you heard about this reality TV series on TLC, following a man named Kody Brown (that's not a misspelling) and his four wives and their gazillion kids through their daily lives as a polygamist family in Las Vegas, Nevada?  I bet you have.

It's polygamy brought into the American home, every week, by the same cable network that brings you shows about hoarding, gypsy weddings, and the lady from Long Island who talks to the dead. 

The Learning Channel.  That's right: you know it. 

Well, fine.  Here's my story.

I'm paranoid about getting zapped with another virus or trojan or some sort of evil malware these days after being hit twice (hard) in the past six weeks, so I'm stopping to do lots of full system scans on Malbytes and Norton.  Which is what I was doing earlier this week after a big research project, and since this kept me from doing more work on the keyboard I decided to take care of some chores.

Yes, of course, I'm building up to why I was watching Sister Wives.  Humor me.

Skip to a fresh load of laundry, a big glass of sweet tea, and a chicken roasting in the oven.  Bad hair, no make-up, stained sweats.  And a remote. 

I'm folding laundry having surfed through the TimeWarner "Entertainment on Demand" selection and coming across Sister Wives' latest two episodes (from the last week of May 2012).  I watch them.

Now, we're here: finally.  The point to my story. 

Seems the Sister Wives and Hubby Kody want to move from four separate rental homes (very nice, new ones by the way) into a cul-de-sac of homes in a neighborhood just being built.  Four houses, side by side, and if I understood this right, a shared backyard.  The husband would move between the homes and each wife (and her kids) gets their own place.

I'm intrigued. 

I wonder about the amount of money that reality TV generates for these people.  Less than the Kardashians, more than the medium? 

They don't seem to have jobs.  (I discover later that the husband has some sort of marketing sales gig and one of the wives is putting together a business plan for a Curves-type franchise work-out place.)

Anyway, I'm folding duds and watching as these five meet with a lender who has found them financing.   Seems there has been a big concern on their ability to get a home loan. 

This seems to ring true: who isn't having trouble getting a home loan in America today given the Foreclosure Fraud fiasco?  Another thing to ponder:  I cannot for the life of me figure out how any of these people are making money other than being on the reality television show.  Especially the kind of money to buy four nice two-story stucco homes with all that goes with that purchase, as well as the kids, the cars, the taxes, heck: the food. 

Let's hope that they've been chatting with Kate Gosselin, if this is the case.  That train doesn't run on those tracks forever.

Setting around the loan officer's conference table, the Sister Wives and Hubby Kody are told that they can get mortgages on four homes for the ... wait for it ... down payment of a mere 40% and this will be an interest only loan.  Balloon payment coming. 

The loan officer suggests that they get themselves into "traditional financing" as soon as possible.

This is my point.  Here. Right here.

The American housing crisis and banking crisis and overall economic crisis isn't going to end with this stuff happening.  

Here is a prime example of why the talking heads are talking about the Housing Bubble.  Because families get talked into loans like this and then they cannot pay them and they default.  

You know this.  I know this. 

I'm curious about who this lender is, where the 40% down payments were supposed to go, and if the loan was going to be sold (which is what happened so often -- risky loans were made and then sold in bulk to other lenders and the original lender skipped away, money in hand, long before any default issues reared their ugly heads).

Back to Sister Wives.  Did they take the deal?  Nope.  But it wasn't because this was a dodgy deal. 

They walked from the cul-de-sac because one of the houses sold and their plan of the shared back yard wouldn't work. 

You can watch the episodes for yourself online here.

My point:  there needs to be legislation to stop this stuff.  People, nice people, get pulled into these deals and lenders and builders and developers let them take these deals.  Could there be lawsuits now, before laws are passed?  I like the idea of a tort action.  Confidential relationship?  Fiduciary duty? 

Rusty wheels in my brain start to turn as I consider what I saw at that conference table and I'm thinking these are arguably confidential relationships, i.e., relationships of unequal bargaining power where the law places an additional duty of good faith upon the more powerful party.  Nice thing if this dog will hunt:  punitive damages.

Imagine that for a moment.  Sweet.  

I don't know if this works, though, under Texas tort law or that of any other state.  I don't know the fix.  Fixes. 

I do know that the crisis isn't over if this was lending offer shown on a national reality television show.  Yikes. 

Great Overview of the Foreclosure Fraud Mess by Florida Atty General's Office

A detailed spreadsheet that gives a great overview of how all this foreclosure fraud mess happened, with concrete examples, was prepared by June M. Clarkson, Theresa B. Edwards, and Rene D. Harrod of the Economic Crimes Division of the Office of the Florida Attorney General.  It's being used in court cases in other states, successfully, in foreclosure fraud lawsuits. 

This visual report, “Unfair, Deceptive, and Unconscionable Acts in Foreclosure Cases,” is easy enough to follow even without any accompanying discussion and I particularly like it for the screenshots it provides of the actual documents involved.  For example, you can see how there were so many different handwriting signatures for "Linda Green," because they give you screenshots of several of them.

It's really quite impressive, and all the more interesting given that two of these assistant attorneys general were later fired from their jobs.  Of course, there's talk that these firings were politically motivated and right now, there's an investigation into their being let go.

Meanwhile, here's their report for you to consider for yourself:

Click on the image to review the full document.

Documentary to Watch -Overdose: The Next Financial Crisis

This documentary is around 45 minutes long, and it's unsettling. However, I think it's worth your time to watch.

BUYING HOUSES REALLY CHEAP: GREAT DEALS WITH BAD TITLE? BUYER BEWARE

Above: The Brooklyn Bridge (always
for sale at a good price). 
Source: PublicDomainPictures.Net

Have you heard (or read) the news feature that is zipping around the web -- homes around the country that can be purchased for less than the cost of a car?  Homes for $100,000; $50,000; even $7000?  (Read all the mouth-watering details here.)

Well, it's tempting to start surfing around for the bargains.  However, before you get serious here there's a little, teensy legal issue to consider:  solid legal title to the property. 

The whole thing about this ForeclosureFraud scandal is because it's not always true that the person selling the real property has legal title to it, no matter how sincerely they think that they do.  Likewise, there are mortgage-holders that are paying monthly payments (or negotiating because they can't make those payments) with institutions who have no legal right to be involved; they don't have a legitimate assignment of the loan.

It appears that most of these bargains are bank-owned, and they are selling the properties with lots of verbiage tagged to the deal (things like "as is," the buyer has to investigate homestead status, etc.). 

Consider the case law coming out of Massachusetts now, with lots of other states possibly following their lead:  there, people that were foreclosed upon years ago are being held to still hold legal title to the property ... even if it's changed hands once or twice and the current "owners" innocently think that they own the home.  They don't.  They own a lawsuit against several entities, though. 

So, be careful out there. 

If it's a beautiful beachfront condo, fully loaded, and it's 35K -- then run.  At the very least, run to a lawyer and get this checked out.  Bad title is a very bad thing.