Archive for the 'Real Estate' Category

Bank Attempts to Foreclose a Widow Even Though Her Home Was Insured

After the 2008 Foreclosure Crisis, many states passed laws to prevent foreclosure abuse. Although these laws are now on the books, the banks themselves were never adequately punished for their fraud. As a result, some major banks continue practices that are clearly unethical and most likely illegal.

foreclosure fraudLaura Coleman Biggs was the target of such a foreclosure practice. Ms. Bigg’s late husband, George Mitchell, had purchased an insurance policy to pay for the principle of the mortgage in the event of his death. The lender, a Bank of America subsidy, had insisted Mr. Mitchell purchase life insurance worth $100,000 to cover the mortgage. This information was kept a secret from Ms. Biggs until April 2015.

Mr. Mitchell passed away in 2003, with $120,000 still on the mortgage. The life insurance policy should have left Ms. Biggs with only $20,000 to pay. However, Bank of America, its subsidy, and the insurance company all failed to notify Ms. Biggs that she had a life insurance payout that could pay off the bulk of her mortgage. Instead, Bank of America continued charging the full $120,000 mortgage. On top of that, the insurance company continued charging insurance premiums even though Mr. Mitchells had already passed away.

By the end of 2011, Ms. Biggs was threatened with foreclosure. Ms. Biggs filed for bankruptcy and the case dragged out for two years. The $120,000 plus “fees” seemed hopeless. Ms. Biggs consulted an attorney, who discovered that the “fees” were not legal fees at all. The “fees” were actually insurance premiums that should have been paid off when Mr. Mitchells passed away in 2003.

After learning about the life insurance, Ms. Biggs filed a lawsuit earlier this year against Bank of America and all parties involved for maliciously conspiring to ignore the insurance policy that allows Ms. Biggs to stay in her home.

Expanding Existing Protection  

Many of the anti-foreclosure abuse laws were written to prevent a procedure known as “dual tracking.” Dual tracking is the lending practice of offering mortgage modification while foreclosing the homeowner at the same time. Banks that use dual tracking are negotiating in bad faith and many states now have laws prohibiting such foul play.

Currently, dual tracking laws only prohibit simultaneous mortgage modifications and foreclosure. However, lawmakers and judges should expand anti-dual tracking laws to include situations like the one Ms. Biggs found herself in. In Ms. Biggs case, there was a pool of insurance money that Bank of America and its subsidiary should have used to satisfy the loan. Bank of America knew the insurance existed because the lender suggested Mr. Mitchell purchase insurance in the first place!

Dual tracking laws should be amended so that banks cannot foreclose homeowners while there are alternative remedies available to the lenders. Dual tracking laws were created so that banks have to exhaust all options before using foreclosure. Mortgage modification is one such option, but insurance payments are another option that banks can utilize before foreclosing a homeowner. Widows should not be thrown out of their homes while banks and insurance companies pocket the profits.

George Lucas Has a Right to Build Affordable Housing Even If His Neighbors Disagree

Back in 2012, George Lucas tried to build a production studio for his company, Lucasfilm, on his Grand Ranch property in California’s Marin County. The median household income of Marin County is $90,000. The county’s board of supervisors protested the construction of the production studio, citing noise, traffic, and environmental concerns. Lucas eventually yielded to the collective wisdom of the council and ended the project

george lucas affordable housingInstead, Lucas proposed building affordable housing in 2013, using money from Lucas Valley Estates Homeowners Association. Once again, the neighborhood protested the project, arguing that the drug dealers, crime, and lowlifes would destroy the character of the county and drop property values.

Earlier this month, Lucas proposed to continue with his affordable housing project, but with his own money this time. The 52-acre project would cost about $200 million and would include a community center, swimming pool, farm, gardens, bridges, and bus stops. Lucas told the media through his lawyer that “We have enough housing for millionaires here; we need some housing for regular working people.”

Lucas Strikes Back

It’s easy to envision what Lucas’s position would be. The project would be on Lucas’s land and paid by Lucas himself. The ranch is his property and therefore he should have the right to build whatever he pleases on it.

The neighbors could raise any applicable zoning laws and possibly nuisance violations. However, the zoning card was already played when Lucas was forced to abandon his studio plans. Now that Lucas is constructing residential housing, the laws restricting construction to residential property are easily satisfied.

Although affordable housing could bring more people, that doesn’t mean affordable housing would bring drug dealers and other unsavory characters. Affordable income is for households with a median household income; affordable housing is very different from transitional housing or non-market project rentals. The latter often attract crime because the residents often turn to non-legal means to make income while the affordable housing deal with workers who make money, but just need a little push to access better housing.

It’s debatable whether affordable housing is a good idea, but Lucas seems to think so. Affordable housing might affect property values, but there is no right to high property value. However, Lucas doesn’t appear to be constructing a slum. With a swimming pool, community center, and gardens, Lucas is constructing an entire community. If managed correctly, a medium household community wouldn’t tank property values. As long as Lucas is willing to pay for and take responsibility for his project, there’s no reason to deny Lucas the use of his own property.

Zombie Properties Create Issues for Neighborhoods across the Country

Recently we’ve all become somewhat obsessed with what’s known as “zombie culture.” Popular movies and shows like World War Z and The Walking Dead spin out tales of survivors of the zombie apocalypse. Some people take these possibilities seriously, and have stocked food and weapons for the apocalypse. There are even entire websites devoted to zombie apocalypse preparedness.

FC land bankHowever, in the real estate world, a different type of zombie outbreak has already begun to gain a foothold in real life. There has been observed an increasingly common pattern of unresolved foreclosure situations leading to what are known as “zombie properties.”

Zombie properties result when a foreclosure proceeding begins, but is never completed because the owner moves out of the home before the foreclosure process can be fully completed. This leaves the property in a twilight-like state- no one occupies the home, but the property remains in the homeowner’s name. Or, there is an extended dispute over ownership of the home, as many banks may be reluctant to claim such properties. Some zombie properties may have no owner and may remain in this state for months or years.

For some communities, zombie properties can create major problems. Properties that are left unoccupied for long periods of time can create pest control issues, plant overgrowth, increased wildlife, and other problems. They can also lead to more serious issues such as crime (the home may turn into a haven for drug trafficking and gang activities). These types of issues can “infect” the overall neighborhood and lower property values. Statistical reports indicate that the most affected metropolitan areas in 2014 were the New York/New Jersey/Long Island areas, and areas in Florida such as Miami, Ft. Lauderdale, and Tampa areas. Other states have been hit hard too.

In my opinion, completely preventing zombie foreclosures might be a difficult task, as they are somewhat of the “fallout” resulting from the mortgage crisis from the past decade. Also, some zombie property situations are difficult to avoid (such as when the previous homeowner suddenly moves to a different state or out of the country). However, being able to identify and address the existing zombie homes can help prevent them from “infecting” the entire neighborhood through disuse and lack of upkeep.

Some possible methods for curbing the effects of zombie foreclosure situations may include:

  • A push for more legislation requiring increased coordination between banks, mortgage companies, and state/local housing authorities.
  • Creation of phone hotlines where neighbors can call to report suspected zombie properties.
  • Streamlined court processes for auctioning off homes that have been deemed as zombie properties (usually homes that have been in that state for at least 3 years).
  • Enforce quicker response times in terms of condemning and demolishing problematic zombie properties.

I think these steps can help to reduce one of the main problems with zombie homes, which is that they are left unattended for long stretches of time. This is a problem that appears to be growing, and will be with us for a while. As such, it’s important for communities and local authorities to begin recognizing the dangers associated with such properties, and begin taking steps towards winning the war against zombie properties. If you notice any homes or properties that might be suspect, contact your local housing authorities, or a real estate attorney for assistance with the situation.

Successful Landslide Lawsuits

Landslides are a large risk in elevated parts of the United States, such as the Appalachians, Northwestern United States, and Southern California. Landslides claim a billion dollars in property damage and cause 25 deaths each year.

Most landslides are triggered by natural events, such as earthquakes or heavy rainfall. However, humans can also contribute to landslides. Although successful landslide lawsuits are uncommon, here are three recent cases that succeeded:

La Conchita landslide lawsuit1) La Conchita – 2008

La Conchita, California has a history of landslides. The landslide of 2005 was the most devastating. That landslide destroyed thirteen homes and killed ten people. The families of the deceased sued La Conchita City and La Conchita Ranch Co., a ranch on top of a hill overlooking the residences.

The jury determined that the city was not liable, but La Conchita Ranch was fifty percent liable because they failed to install a proper drainage system which would have diverted some of the rain water. $5 million was divided between thirty-six plaintiffs.

2) Rolling Hills – 2010

In 2005, 300 feet of rocks and debris collapsed onto Poppy Trail residence area. The retaining wall holding back the rocks was eroded after a winter of heavy rainfall. Roadways were blocked, cutting off passage to nearby houses. Residents were forced to use all-terrain vehicles to access their multimillion dollar homes.

The slide also resulted in a guesthouse hanging over the edge of a small cliff. If the cliff had collapsed, the guesthouse would have fallen on top of the other houses. The owner of the guesthouse refused to repair his property, but subsequently disappeared from the state.

In the end, a settlement was reached. Two new driveways were constructed and the hanging cliffside guesthouse was demolished. Residents received $40,000 in damages each.

3) Mill Valley – 2007

In 2006, 70 Bolsa Avenue was destroyed by a mudslide. Walter Guthrie was removing debris around his house when it happened. He was crushed to death when an avalanche of mud came down after hours of rain.

His widow, Lisa Guthrie, sued the city for property and personal damage because the city knew about the dangerous conditions of the hill overlooking the Guthrie house, but failed to act. The jury awarded $4.8 million as a result.

Since the jury also found contributory negligence on Walter’s part, the judge lowered the final award to $4 million. However, it is still difficult to find fault with a man who was trying to save the house he and his family had lived in for thirty-five years.

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California Senator Seeks to Reopen a Beach Blocked by a Billionaire

Senator Jerry Hill Proposes a Bill to Reopen California’s Beach Blocked by Billionaire Vinod Khosla

Surfers love the beach, but would they be willing to swim through a shark infested ocean to reach their favorite surf spot? Vinod Khosla presented this very question in 2008 when he purchased and closed the only gate access to Martin’s Beach in California for $37.5 million.

PROTEST AT MARTINS BEACHThe beach-access gate is part of 89 acres of beach property Khosla purchased. The surrounding area, Half Moon Bay, is appropriately named because it is shaped like a crescent moon, thereby restricting pathways. Costal access to Martin’s Beach itself is cut off by towering bluffs.

Khosla, co-founder of Sun Microsystems, purchased the property from a family which had owned the land for most of the 20th century. The family had allowed the public access to the beach in exchange for small fees. The fees were merely for the right to walk across the property. The beach itself is considered public land. The problem Kholsa has created is that the public can no longer enter public land.

In October 2013, Judge Buchwald ruled in favor of Kholsa. Although Judge Buchwald acknowledged that the California Constitution preserved a public right to beach access, the judge decided that all public rights to the property were extinguished because of the local history. The Treaty of Guadalupe Hidalgo, the treaty which ended the Mexican-American War in 1848, required that the United States recognize Mexican land grants as long as the original owner filed a claim. The original owner of the property in question, Jose Alviso, had filed the claim and the United States Supreme Court had affirmed the grant in 1859.

Although Half Moon Bay residents lost the case, their attorneys have filed for appeal. However, California lawmakers aren’t waiting for the courts to act. On February 10th, State Senator Jerry Hill introduced a bill which would require the State Lands Commission to buy an easement from Khosla. If the Commission fails to make a deal with the billionaire within a year, the Commission would also be required to exercise eminent domain and seize the necessary land from Khosla.

Eminent Domain: Using a Nuclear Weapon to Kill a Cockroach

I’m going to say right away that Kholsa is being extremely selfish. California has repeatedly acknowledge the important public policy to “maximize public access to and along the coast…consistent with sound resources conservation principles and constitutionally protected rights of private property owners.”

Although California has recognized Khosla’s property rights by attempting to discuss terms with him, Khosla himself cannot continue to defy public policy. Khosla could save a great deal of effort and money by giving the public access to land which rightfully belongs to everyone. If the previous owners could negotiate a deal with the locals, a businessman who hires former Prime Minister Tony Blair as an advisor and who dines with President Obama at fundraisers should be able to work out a settlement over beach access.

With that said, eminent domain is a draconian application of state power. The only other uses of state power more extreme than eminent domain are the death penalty and military drafts. Government deprivation of people of life, liberty or property is unjust, and eminent domain is deprivation of property. Historically though, eminent domain was at least tolerable because it was justified by the necessity of a “public use,” such as highway or hospital construction.

Today, “public use” has somehow expanded to include private development of land. Local governments today use eminent domain to give private corporations like Wal-Mart land which rightfully belongs to others, or use eminent domain to take land which rightfully belongs to private corporations like Wal-Mart (Wal-Mart is both villain and victim). The Constitution requires that private owners who have had their property taken by the government receive “just compensation” but it is debatable whether the compensation is ever “just.”

It is arguable that preserving state policy regarding access to public land is a public purpose and that Khosla himself has left California with almost no other options. Both are true, but we could reach the same results through an easement by necessity rather than an exercise of eminent domain. The results would be the same (although it’s questionable whether Khosla would receive just compensation in the former), but the precedent would be narrower. An easement by necessity would establish that a stubborn billionaire was violating public policy by cutting off land access while eminent domain would simply open the door for more government intrusion into property rights.

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