Tuesday, October 27, 2009


Castle Made of Sand

When my landlady attempted to coerce me into signing a fake lease (falsely stating triple our actual rent) for the purpose of defrauding her mortgage lender last summer, I was unfamiliar with the chaos that had created a climate of corruption in the foreclosure lending industry. All I knew at the time was that the deregulation of banking and real estate had spun out yet another pyramid scheme, and that millions of homeowners and tenants were being displaced nationwide. Little did I dream that one year later I would come home to my apartment to find a Trustee's Sale Notice taped to the door.

Now, one month later, the Trustee's Foreclosure Sale has been forestalled by a last minute application for bankruptcy protection by my landlady, and she issued us a 3-Day Notice to Pay Rent or Quit. Having been in touch with Bay Area Legal Aid since the day after I was surprised by the sale notice, we held our rent for the new owner or bank, in order to prevent our unscrupulous landlady from skating with that money, as well as our last month rent and security deposit.

As we now wait for the U.S. Bankruptcy Court to dispose of our landlady's application, my main question is whether our landlady – a mortgage broker and realtor herself – will walk on her earlier fraud that led directly to the current mortgage delinquency and foreclosure, or if the bankruptcy court will give her a pass.

Looking over the foreclosure notice the other day, I was wondering how a two bedroom, single bath dozer could be mortgaged for a million dollars. I mean, where did the money go? The place is a dump.

I mentioned this to a neighbor who inquired about the Stop Work Notice posted on the fence by the building inspector after the landlady had her handyman begin demolition of her rotten second story balcony without a permit, and she told me that our landlady recently mentioned losing half a million in the stock market. I couldn't help thinking that if she had half a million dollars to invest, what was she doing defaulting on her mortgage and using our rent to live on, but I figured there must be a reasonable explanation.

As it happened, that afternoon I was hiking with a friend in the woods to whom I told this tale, and she said our landlady once tried to lure her into a stock market pyramid scheme, and that a former tenant in our building had lost her shirt on the deal. At this point, it all started to come together.

Apparently, our landlady had refinanced her residence, fraudulently stating its income production in order to borrow against that inflated value to invest in the pyramid scheme. Then, when the scheme collapsed, her creditors, as they say, watched her castle made of sand fall in the sea.

Now I'm beginning to wonder if her bankruptcy application might be referred to the Attorney General's office for investigation. Could she have been stupid enough to try to con the court in covering up her earlier crime? Time will tell.


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