Implications of the Foreclosure-Gate
Not even for a second think that the unfolding foreclosure-gate is a small problem. Last week a California family (Squatters, Danielle and Jim, reclaim their foreclosed home) which was foreclosed upon went back to their house that was already sold to another family, squat there and reclaimed the property. Their contention was that the bank illegally foreclosed upon them with forged document. They sued the bank. Here is their story, as covered by one of my favorite anchors: Dylan Ratigan.
Guess who got caught in this legal mess? The new buyers and the investment firm which bought the property in an auction.
The investment firm, Conejo Capital Partners, issued an extraordinary public statement. You must read this statement in full:
OFFICIAL STATEMENT FROM CONEJO CAPITAL PARTNERS LLC REGARDING THE PROPERTY LOCATED AT 5893 MUSTANG DRIVE, SIMI VALLEY CA:
October 15, 2010
Given the extraordinary and illegal events orchestrated by the former homeowners and their attorney, we now feel compelled to share the facts regarding 5893 Mustang Drive.
On January 28, 2010 the property was sold thru a public auction at the trustee sale held at the Ventura County Court House. Each month this same process occurs thousands of times across the nation as a method for banks to take back or dispose of the property that is not being paid for. Conejo Capital was the “successful” bidder. Shortly thereafter the former bank issued the title and it was legally recorded with Conejo Capital Partners LLC as the new owner of the property. At the time all we knew about the property was that the former homeowners purchased it in 2001 for $539,000, and that they later refinanced it, pulling equity out, resulting in debt of roughly $1,000,000. No “lis pendens” had been recorded indicating any disagreement or legal action pending regarding the property. Had they done so before the auction, we would not have purchased this property.
After purchasing the property we found it to be occupied by the former home owners, Jim & Danielle Earl. We were able to make contact with them and tried to understand their situation. They expressed their opinion that they had been unlawfully foreclosed on by the bank. Yet to our knowledge, the Earls had not initiated a lawsuit against any bank at that time, and as far as we know even today there is no pending lawsuit against any bank. Any grievance they had would have been with their bank, not Conejo Capital Partners. We tried to amicably discuss terms of a possible agreement which would have helped them make a comfortable transition but they were unwilling. They gave us no choice other than having to start an action against them to gain physical possession of the property.
The unlawful detainer action (eviction trial) is something that normally takes roughly a month to complete, but they stretched it out to almost 6 months by filing two bankruptcies. The first one was dismissed due to their failure to file the proper paper work and the second was probably dismissed as well. At the unlawful detainer trial, the judge thoroughly reviewed all of the facts of the case and ruled in favor of Conejo Capital Partners LLC and ordered the Earl’s to vacate the property. We were also awarded a monetary judgment in the amount of just over $27,000 (fair market rental value for the time they illegally occupied the property). The Earls appealed the decision but their appeal was dismissed by the court because they failed to pay the court its required appellate costs. The Earls’ attorney sent us threatening correspondence and amazingly described his plan to a federal court judge in San Francisco that he planned to undertake “self help” to retake possession of the Mustang property illegally. The federal judge denied their motion for an injunction and ruled that the “Plaintiffs have offered no authority in support of this extraordinary concept (of “self help” seizure of the Mustang property).
On July 2, 2010 the Ventura County Sheriff and an agent of ours went to the property to complete the court-ordered eviction. There, they found that the Earls had departed but (based upon their attorney’s advice), the Earls left all of the personal belongings, in the Mustang house including all of their furniture, cars and the family dog. This extraordinary tactic caused us another 2 week delay because we were forced to follow the legal guidelines in dealing with the situation. The Earls contacted us at the very last minute before we would have had legal right to dispose of the property and we allowed them to retrieve it at no additional cost to them.
Once we had gained possession of the Mustang Property, we spent a considerable amount of money remodeling it. When the remodeling was complete, we put it on the market for sale. We secured a buyer and were scheduled to close escrow on Monday October 11th. On Saturday October 9th the Earls and their attorney followed thru with their previous threats and took the law into their own hands. They hired a locksmith to break into the Mustang home. They had arranged to have t.v. news cameras filming their actions, and then proceeded to hold a press conference stating that they were within their rights and that we (Conejo Capital Partners) had somehow violated the law. All along the Simi Valley Police Department sat idle and refused to get involved no matter how much proof was offered supporting our legal rights and position. We were told that we needed to resolve it in front of a judge even though it had already been decided. In the days immediately following, the same attorney has done this again in Escondido and Newport Beach (the latter time both the attorney and his clients were arrested). It is amazing that this can happen in a nation founded on and based upon law. It is truly sad that all across America so many people claim to be the “victim” rather than taking personal responsibility for their actions.
It needs to be noted that Conejo Capital Partners LLC did not take the home from the Earls, their bank did. We simply purchased the home from the bank in a legal manner and then had to deal with the situation that had been created. Conejo Capital Parnters LLC is not a large Wall Street bank, we represent a group of regular people who are hard working citizens that pay their bills and abide by the law. We have approached the Earls on many occasions in an attempt to see if we could find an amicable resolution but in each case have been denied. We offered to waive our monetary judgment in simple exchange for confidence that we wouldn’t find ourselves wrapped up in litigation that ultimately results in everyone losing. Although the former homeowner had roughly $1,000,000 in debt against the home, both they and their attorney have said in recent interviews that they feel like they don’t owe anything and in fact are owed damages as well.
The Earls’ attorney announced proudly that he “chose” the Earls because he needed to protect the new buyers from being defrauded by us. It is extremely unfortunate that he is putting others in jeopardy as a way to create notoriety for himself. The facts about Mr. Pines life are well documented and we urge you to do your homework on him and decide about his motives for yourself.
The most innocent of all victims in this situation are the new buyers who had signed a contract to purchase the Mustang property. They are a family of 4 who are adopting their first child this month. They had already funded their loan, spent money on appraisals, given notice at their current residence and were scheduled to take possession of 5893 Mustang Drive on Tuesday the 12th. They have now cancelled the transaction and are scrambling to find a place to live as they will be homeless at the end of the month. They are scared.
This is a terribly unfortunate situation to be involved in, one that we wouldn’t wish for anyone to experience. We especially feel for the children who are being subjected to this, and the new buyers who will be temporarily homeless as a result of these events. In all likelihood, there is no way for us to recover the damages we have suffered, this is no longer about winning; it is about what is right. We didn’t ask for a fight; it was brought to us. Now with no other options, we feel compelled to do everything in our power without regard to cost or time to protect ourselves and insure this does not happen to others.
Conejo Capital Partners LLC
Note the statement “Conejo Capital Parnters LLC is not a large Wall Street bank, we represent a group of regular people who are hard working citizens that pay their bills and abide by the law.” They make it a point to distance themselves from the fraudsters and sociopaths at Wall Street banks. Who wouldn’t? Zero Hedge, the blog I follow regularly has this to say about this mess.
By now the 30 minutes of media fame of the Simi Valley’s most (in)famous squatters – the Earls is running out. Yet the consequences of the their actions will resound for a long, long time. The victims: all those may have bought a house in a foreclosure auction, or any other form of existing property sale, without a “lis pendens” or other form of pre-existing legal action, will suddenly think twice about purchasing a home from a bank, or any other owner who may have had a mortgage on the property (now in MERS limbo), and simply end up unwinding the sale. The reason, as Conejo Capital Partners notes, is that nobody will now know when some other set of squatters, who may have owed as much as the Earls (almost a million), and did not contest their loan in good standing with a bank, decide to take the law into their own hands and move right back in. “The most innocent of all victims in this situation are the new buyers who had signed a contract to purchase the Mustang property. They are a family of 4 who are adopting their first child this month. They had already funded their loan, spent money on appraisals, given notice at their current residence and were scheduled to take possession of 5893 Mustang Drive on Tuesday the 12th. They have now cancelled the transaction and are scrambling to find a place to live as they will be homeless at the end of the month. They are scared…. We especially feel for the children who are being subjected to this, and the new buyers who will be temporarily homeless as a result of these events. In all likelihood, there is no way for us to recover the damages we have suffered, this is no longer about winning; it is about what is right.” And the tragedy in all of this, is that there is no clear guily party, as everyone is to blame: the banks, for rushing on the original sale to rake up the NINJA fees, the foreclosure “experts” for robosigning to accumulate the lowest possible cost basis on the subsequent MBS resale for the mortgage servicer, and the squatters, for deciding to take the law into their own hands, when suddenly there is no law. One thing is certain, this incident will propagate and will make existing home sale next to impossible. And yes, inventory will accumulate, but demand will plunge, resulting in a total collapse of the supply-demand equilibrium point, better known to those idiots a/k/a economic Ph.Ds, as price. But that is precisely what happens when in the pursut of material gains, by everyone, the rule of law is now completely trampled in the USA.
Friends, if you are in the market for a house and looking at foreclosed house to buy – my advice, don’t. You cannot trust their documents, nor can you trust that the previous owner does not have any right to the property anymore.
I believe that this will turn really ugly, and really fast. The first indication will be the bottom will fall out of the US stock market – may be as soon as this week – the week of October 18th.