Tuesday, May 27, 2008

You Could Be Put In Jail If You Walk Away On Your Mortgage | Weird Facts

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weird facts - Despite objections from consumer advocates, in the last two weeks California judge Jed Clampbet has sent 142 delinquent homeowners to state prison for up to three years each, for failing to honor their home mortgage obligations.

Most of the former homeowners were shocked to find they could be suddenly locked up for employing the common “walkaway” strategy, where homedebtors whose no-money-down adjustable-rate teaser mortgages are about to reset to full actual interest rates simply stop making payments but continue living in their homes rent-free for up to eight months before being evicted, then try to skip town leaving the bank holding the bag.

Under the anti-fraud provisions of the 1969 California Real Estate Loan Statute, section 7, chapter 13, such behavior is indeed criminal and can be prosecuted. Until recently the law had not been actively enforced, but due to the tidal wave of foreclosures the district attorney is now cracking down hard on mortgage scofflaws.

Banks generally applaud the stepped-up enforcement. “These folks thought they could just scam the system and get away with it,” admonished mortgage industry spokesman Snidely Wachovia. “Now they’re finally getting what they deserve.”

Consumer rights groups are organizing protests across the state, trying to stop or at least slow down the impending prosecution of an estimated 20,000 additional delinquent homeowners. “These people are completely unaware of what is about to happen to them,” claimed Shirley Yewghest of the California Delinquent Homeowners Protection Association. “Yes, they did receive foreclosure warning letters in the mail, but very few actually read the fine print. They hear people telling stories of walking away without getting caught, and they think they can get away with it too. By the time they realize that they are in fact criminals, it’s too late, and they find themselves behind bars.”

All the news is not negative, however. Apparently spring is in the air in the California state prison system, bringing along with it dozens of whirlwind romances between newly-jailed former homeowners and long-time inmates. And thanks to the new ruling legalizing same-sex marriages in California, wedding bells have been ringing non-stop.

Lifetime inmate Bubba “Whoppa” Johnson found new love with Cornwell Sooie, a San Diego real estate investor caught up in the recent sting operation targeting delinquent homeowners. Back in 2006 Mr. Sooie was sitting atop a mini real estate empire worth nearly $8 million on paper. When the housing bubble collapsed, he lost it all.

Those fast-paced days of real estate deal-making are butt a distant memory now, as Mr. Sooie settles in to his new married life in prison. While nuptial bliss is no substitute for the thrill of easy real-estate riches, at least it will keep him busy for the next three years.

[Via - WallStreetExaminer.Com]

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