Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Back in April of last year I paid cash and bought some land with a house.  I went through the abstract company, lawyer and got title insurance on the place.  All legal and the correct way.

I have never had a mortgage in my life.  I paid cash for this place.  I have in my hand a clear deed, and my title insurance.

I was wondering why the county hadn't sent me my land tax bill for this last year, so I went online to see what was happening.  Only to find out that Citimortgage had paid my land taxes, and I also started receiving letters from some mortgage life and disability insurance plan company, that stated they got their mailing list from court records.  Stating at the top of their letters, it says that my lender was confidential information and that the amount was also confidential. 

Of course I find all this out at eight o' clock at night when no one is around for me to start calling, so I suppose I will just remained panicked and call first thing in the morning to see how big of a mess this is.

Could this just be a court clerical error, or is this some kind of scam.  Why would my county treasure never send me the land tax statement in the first place, when it clearly states on my deed to send it to my address.

I would also assume if this Citimortgage thinks they can slap a mortgage on my land that I never signed up for, they would have to show loads of paper work where I supposedly signed for it.

I hope this isn't some giant mess I have to pay for to unravel and straighten out. 

Any advice, or has anyone heard of this before.....?? 

NOTE:  I have no debt, I have no car loans, I pay cash for everything.  No outstanding anything what so ever...

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Sara
Well, it's a good thing that you found this out at 8pm...you really need to deal with this in writing.  When you have things in writing, it helps your case in court.  This is why I say to stay off the phone!!!


I would go to the county courthouse (if you can't access your records online) and see just what has been put on the records book.  Then you have a starting point.  Then follow up with the tax assessor's office.

Please only deal with Citimortgage by mail!  You will probably have to hire an attorney to fight this battle.


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William A. Roper, Jr.
zip:

One DISADVANTAGE of being debt free and having a property free and clear of a mortgage is that you are an IDEAL candidate for identity theft.  What identity thief would want to steal the identity of someone who has already maxed out all of his credit and has a horridly LOW credit score?

One possibility that you need to investigate RIGHT AWAY, is to check the county mortgage records to see whether someone has taken out a mortgage on YOUR PROPERTY in YOUR name.  (Similarly, you should make sure that someone hasn't SOLD your property!)

The GOOD NEWS is that if an unauthorized person executed an instrument by forging your name, the instrument is inherently VOID. 

But there are also some more sinister possibilities.  For example, IF you granted a valid power of attorney to another person to manage some or all of your affairs, as persons sometimes do when traveling overseas for an extended period, a person could actually BIND YOU by executing lawful documents on your behalf.

Another kind of problem can exist where you have rented or leased your property out to someone else.  Since this person is actually IN POSSESSION of your property, they are in an ideal position to create an IMPRESSION that they are the actual owner.  (Note that it is somewhat hard for a stranger to get a mortgage on your house since the stranger lacks the ability to grant ACCESS to an appraiser.)

As an absentee landlord, you would want to REMOVE indications that you actually OCCUPY the property, such as YOUR NAME on the mailbox, a phone listing at that address, tax or utility bills delivered to that address, etc.  That is, if you SET YOUR TENANT UP with all of the incidents of ownership, you might have some culpability in the fraud he perpetrates! 

If you find any sort of instrument recorded in your name granting an interest in your property, be it a deed, mortgage, easement, etc., you should probably consult a good real estate attorney right away and possibly also contact law enforcement authorities.

(It couldn't hurt to check your credit reports either to verify that the ONLY accounts showing are accounts you have authorized and opened.)

If there are no such instruments, a few other possibilities exist.  One of these is that the legal description of someone ELSE's mortgage or deed is ERRONEOUS.

For example, in preparing the legal description for a property subject to some other mortgage, there could have been a digit transposition in the lot number "23" for "32", a transposition of the Block and Lot number (e.g. Block 2, Lot 3 for Block 3, Lot 2), etc.

Or the real estate records could be totally correct and the problem might be solely with tax assessment or county tax account records.  For example, in altering the mailing address for a property with Tax ID 123456-789 they might have inadvertently altered the address for the property with Tax ID 213456-789, which just happens to be YOUR property.  OR if your name is James SMITH and you live at 123 Pleasant Street, they might have pulled up YOUR property on the computer while looking for another different neighbor also named James SMITH who lives at 321 Pleasant Street.

The possibilities are endless!

*

One mischievous tendency would be to allow CitiMortgage to continue voluntarily paying your taxes as long as it desires.  But it seems likely that at some point they are going to realize their mistake and come around seeking to recover amounts they have erroneously paid OR which the taxing authorities have ERRONEOUSLY APPLIED.

Note that if the error is with the taxing authority, they are probably going to simply REVERSE OUT the amounts misapplied and then BILL YOU for the amount you are due, possibly assessing LATE FEES.

If the error is by CitiMortgage, they might sue you and any amounts you expend defending such suit are going to well exceed any advantage you obtain from the intervening use of their money.  Of course, you could allow them to pay and then be prepared to pay back the amount misapplied immediately upon demand.

*

There is another ethical reason to seek to correct the error right away even if it seems to be in YOUR favor.  Suppose that the problem is owing to the misspecification of the land description or to an erroneous tax account number.  The fact that CitiMortgage IS paying YOUR taxes is suggestive that some other CitiMortgage borrower's taxes are NOT getting paid.  At some point, after the taxes accumulate for a while, the municipality will seek to SELL that property for back taxes.

Someone might LOSE their property due to this carelessness.  And you can be rather certain that CitiMortgage will REFUSE to take responsibility.

So I would do a little digging and overcome the inclination to let CitiMortgage's error in your favor persist.  

PLEASE NOTE THAT I AM NOT A LAWYER AND THIS IS NOT LEGAL ADVICE!
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arkygirl
Beware of others paying your property taxes, get this straightened out ASAP. Citi may be able to take possession of your property via Adverse Possession laws. In my state seven years is all it takes.


Arkansas Adverse Possession Laws


Explanation of Chart and More Information on Adverse Possession Laws

Code Section 18-61-101, 18-11-101 et seq.
Time Period Required for Occupation 7 yrs.Can't eject after 5 yrs.
Time for Landowner to Challenge/Effect of Landowner's Disability After disability lifted: 3 yrs.
Improvements -
Payment of Taxes 7 successive years; 15 yrs. consecutively for wild and unimproved land creates presumption of color of title
Title from Tax Assessor -



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Stephen

Yep.  Common ploy to steal your property.  Pure profit for the bank.  Next step:  Sherriff at the door with a backdated eviction notice.  Get a gun.

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William A. Roper, Jr.
Quote:
arkygirl said:
Beware of others paying your property taxes, get this straightened out ASAP.  Citi may be able to take possession of your property via Adverse Possession laws. In my state seven years is all it takes.


Arkygirl:

In most places those claiming property by adverse possession have to have actual possession of the property and to openly and notoriously occupy the property to the exclusion of the real owner.  But you are absolutely correct to point out that tax payment is very often an element of an adverse possession claim, and in many places adverse possession is accelerated when the adverse possessor is openly paying the taxes.  And your point is another in support of the conclusion that it would be best to resolve this situation at the earliest opportunity!
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Thank you for the response, and updating is good news.

I called the county treasurer and he informed me that citimortgage sends a huge bulk check to pay the taxes on all the properties that they hold mortgages on in the county.

The previous owners had paid off their citimortgage mortgage, not too long before I purchased the property, and they had been previously paying the taxes on this property.  I also called the county clerk and found that there were no mortgages on my property, everything was recorded and correct.

I gave the county a check for my taxes and they will be refunding citimortgage. 

Luckily all turned out well, I was just so worried with all that has been going on with these mortgage companies with their mistakes and over sights.  I guess this is just another example of them not staying on top of their stuff, to have paid taxes on a property they don't even hold anymore....

If all else fails............PANIC FIRST.........

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arkygirl
In the spirit of true paranoia, I would urge you to get something in writing from your clerk/tax collector explicitly stating that taxes paid on Section number, Block number, blah, blah, blah were refunded to Citi by the county on 00/00/2011, check # ??.

We all know that big banks are riddled with "mistakes". County personnel come and go and sometimes they are not trained as well as one would like.

If Citi makes a "mistake" and fails to credit the tax refund properly, they may send you a "letter" later on.

CYA. The county clerk should be able to just mail something to that effect. Peace of mind is worth a lot.


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William A. Roper, Jr.
Arky:

Not to retreat from the analysis and suggestions in my prior post, I believe that the risks of losing the property as a consequence of a single misdirected tax payment are pretty remote.  For reasons discussed above, I believe that zip needs to do a little investigating and get to the bottom of the problem as to whether zip is the victim of some identity fraud or a fraudulently filed deed or mortgage.

And zip needs to be mindful of the possibility that it is the taxing authority rather than CitiMortgage which has made the mistake and misapplied the payment.  If this is the case, the tax collector can probably simply make a correcting accounting entry and MOVE the funds from one tax account to another creating a tax arrearage.

For this reason, it is essential that zip NOT take the liberated cash flow to finance a cruise.  Zip needs to have the funds at the ready for the moment if and when payment of these taxes is demanded.

Permit me to present two examples by way of analogy.

Suppose that SMITH takes his paycheck to the bank and correctly makes out a deposit slip to deposit the paycheck into his checking account.  Suppose that SMITH further writes his correct bank account number on the check indorsing the check "For Deposit Only #12345678-9" (his correct account number) and signs his name "Smith".  Finally, let us suppose that the bank teller is somewhat careless and in typing in Smith's account number erroneously transposes the digits, instead telling the computer that the check is to be deposited into account ""#21345678-9", an account in the name of JONES.

It is pretty easy to see in this example that when SMITH discovers that the deposit was never credited and find checks begin to bounce, that SMITH is going to contact the bank and demand that he be fully credited for the deposit.  With SMITH's deposit slip, the amount of the erroneously debited deposit and the date and place of deposit, the bank will quickly discover the error and make a correcting entry.  If JONES has withdrawn and absconded with the funds, the bank will go after JONES.  If the money is still sitting in JONES' account, it will simply disappear.  Poof.  Problem solved.

JONES is at peril that on any given day the funds may be simply withdrawn through a correcting entry by the bank, which made the error.  Of course, in this case, JONES COULD withdraw the amount and CLOSE the account.  If JONES does so, JONES would force the bank to sue to recover the money.  But JONES has very little hope of WINNING.  If JONES is a vagrant and rushes out and spends the money on whiskey, the bank might have a collection problem.  But if JONES is a landowner, the bank can probably get a judgment and may be able to enforce the judgment through further collection actions.

Leaving aside the ethics of trying to keep the erroneously applied funds, JONES needs to be asking himself whether the amount of the error and the likelihood of being pursued would justify destroying his otherwise satisfactory banking relationship by closing the account, etc.

*

As a second example, suppose that SMITH takes his paycheck to the bank and forgetting his checkbook and deposit slip uses a blank deposit slip.  Instead of writing his OWN account number he writes JONES' account number on both the deposit slip AND on the check.  He then voluntarily deposits his paycheck into JONES' bank account, which was certainly NOT his intention.  He hadn't intended to make a gift to JONES.  In this case, it is SMITH, NOT the bank which has made the mistake.

Presented with these facts, the BANK now has a problem.  It has debited and applied the funds AS SMITH HAD INSTRUCTED, but NOT as SMITH had intended.  I suspect that if we looked, we could find some cases on this point, though I would also expect that in most instances, this would be resolved informally without court intervention.

If SMITH is a good customer and the bank wants to retain SMITH's business, it may very well make the correcting entry removing the money from JONES' account, but it must do so at some peril.  What if SMITH and JONES were actually involved in some commercial transactions, as where SMITH has promised to JONES that he will deposit his entire paycheck in consideration of some overdue debt, etc.

In this case, the bank MIGHT reasonably PLACE A HOLD on the funds in JONES' account and ASK JONES if there is any reason that the transaction shouldn't be reversed.  Hearing none, they might then rescind the transaction as to JONES and make appropriate correcting entries.  (Please understand that I am suggesting a possible resolution, NOT suggesting that this is indicated by statute, case law or bank policy.)

But consider how the outcome differs when JONES withdraws the funds and closes the account immediately upon discovery of the error in his favor.  Since the error is attributable to SMITH rather than to the bank, the bank can fairly reasonably tell SMITH that his recourse is to recover the funds directly from JONES.  After all, the bank merely expressly followed SMITH's written instructions.

It would seem to me that SMITH has a pretty good cause of action against JONES.  JONES can hardly identify the funds as a gift, since SMITH and JONES are strangers and unacquainted.  Moreover, under the common law a valid gift typically is measured by (a) donor intent, (b) delivery, and (c) acceptance.  While the delivery and acceptance elements are in place, donor intent is NOT.  Even the completed deposit slip and indorsement is consistent with a scrivners error and mistake as to fact rather than intent to donate his paycheck to JONES.

But simply because SMITH has a strong cause of action, it doesn't necessarily follow that a speedy and complete recovery will follow.  SMITH is going to have to FIND JONES, make a demand, prepare a complaint, serve JONES, appear in court, etc.  Depending upon SMITH's level of sophistication and the amount involved, SMITH may need to employ a lawyer.  And even if he gets a judgment for the full amount, he is unlikely to get attorneys' fees, since it was SMITH's mistake that set this incident in motion.  If JONES has spent the money and/or is indigent, a full recovery might not be possible.

The ethical thing for JONES to do is return the funds to SMITH.  But as a practical matter, if JONES were to agree to return half of the money of 75%, SMITH might come out ahead when compared to the time and expense of litigation.  Which is to say that JONES could very well negotiate a settlement that involved return of LESS than all of the proceeds.  But JONES should only do this by entering into a written settlement agreement which includes a full release from any and all other liability, etc.

*

Overall, under the facts given by zip, we do NOT KNOW the origin or character of the mistake.  While it seems quite likely that the taxing authority or CitiMortgage is going to discover the error and reverse the payment, this is far from certain.

Given that CitiMortgage is an inherently dishonest and criminal enterprise, we can expect that it would almost NEVER do the ethical thing if it could gain advantage by the dishonest approach.  And while I sympathize with the borrower whose escrow has been misapplied, if that borrower is conscientious and businesslike, they will get the misapplication corrected as it applies to the borrower's escrows.

I might be inclined to KEEP the amount of the tax payment in reserve, while sending a very nebulously worded letter via certified mail to CitiMortgage thanking them for their gift!  I might send the letter using a post office box in a large urban area (possibly in a different jurisdiction from the subject property and taxing authority) as the return address and (borrowing from their dishonest tactics) show my name as vaguely as possible.  (If my surname was common, I might "accidentally" transpose characters.)  For example, the letter might come from "W. Roper; P.O. Box 123, NY, NY", etc.  I wouldn't identify the property.  I might identify the amount of the erroneous tax payment, being confident that they would be unable to search on this basis.

The letter might say something like:

"W. Ropre
PO Box 123
NY, NY

Dear CitiMortgage:

Thank you for your generosity in paying my real estate taxes for tax year 2009.  This was a very touching and thoughtful gesture, particularly in the face of both our nation's financial adversity and the troubles faced by your own parent financial institution.  Your generous payment of taxes on my behalf seems to indicate that you are applying federal TARP bailout money and the ongoing implicit bailout of the Fed's QE2 program to help relieve the financial adversity of people like me.

I saw from President Obama's State of the Union message that it is very important for consumers to begin spending money to help revive the economy after the collapse that your institution and other Too Big Too Fail banks caused.

In the spirit of the President's guidance, I have booked a Caribbean cruise on a U.S. flagged vessel and will spend the cash flow freed by your voluntary payment of my taxes right away.

If you want to pay my property taxes again next year, this is OK, but in an abundance of caution, I am going to refrain from acceptance of such a gift for three consecutive years.

Again, thank you for your generosity.  Your payment of taxes on my behalf was an unexpected windfall.

Sincerely,

W. Roepr

P.S. -- I do not have a bank account at Citibank or a mortgage with CitiMortgage.  While I can see that many would appreciate your generosity and gesture and might be inclined to bank with you in the future, I do not need a mortgage and, being conservative and cautious, do not place deposits in banks that simply give money away (even to me) or which are likely to fail and require further taxpayer bailout.  I hope this candid postscript doesn't make me appear ungrateful."

I would sign the letter only with my first initial "W", which I would scribble in an undecipherable way.

I would save a copy of the letter and my certified mail return receipt to use defensively whenever they come around asking for the return of the amount.

I would view the cost of the postage as a slightly better bet than a lottery ticket!  (I would keep the funds available, rather than taking a cruise.)

If the tax collector has misapplied the payment, then I would EXPECT the transaction to be reversed.  If CitiMortgage has erroneously paid my taxes, I would expect them to remain confused, possibly for some time.  They will be even MORE confused after the enterprise fails completely and is broken up!

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arkygirl
I wasn't concerned that the OP would be foreclosed on at a later date. It sounds like an error on Citi's part. BUT, Mr. Roper, you should know better than anyone how bank "mistakes" can become problems for everyone except the banks later on. You also know that unexpected funds tend to vanish without a trace in the gulag of banks.

I WAS concerned that Citi might try to send the OP a bill claiming that they were owed the tax money back down the road. That turnback is in the hands of the tax collector, not in the hands of the OP. Everyone needs to account for the actions they took in this case.

The OP has paid his taxes on his own property now and I am sure has a receipt for that. I was simply urging him to acquire a piece of paper describing the error that was found and what the tax collector's office did to resolve it. Undoubtedly, the money was (or soon will be) turned back properly. Just a bit of verification for the OP just in case a bill is issued by Citi. If the OP has the tax receipt and a stamped letter of explanation, that may be all it takes to force Citi to correct its own "mistakes" if some should occur.

If I was given the erroneous tax funds and could send them back myself via cashier's check, certified mail, etc. I would not worry one bit. I would just do it, creating my own paper trail in the process. The OP is not going to be allowed control of this issue. The person who has control of the issue must therefore step up and verify to the OP that the money was retuned properly.

I am the type that prefers to have all supporting documents in my own possession in these cases. I would rather have more verification than too little. I just felt that it might be more difficult to get supporting documents later if the courthouse has a turnover in personnel. The next clerk won't have a clue what was done by this clerk.

Not all the people working in local government offices are well-trained. Most of them learn on the job because counties refuse to pay for a two-week training period (no over-lapping salaries allowed for the same position). So, mistakes get made sometimes by county offices when newer people run up against a situation that they have not had to deal with before.

"Trust, but verify. And make everyone involved verify."

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William A. Roper, Jr.
Arky:

My post immediately above is slightly whimsical.  The ethical thing to do is to be proactive and resolve the matter even though the error was in error.

I believe that the entity which has erroneously advanced funds by mistake has the law on its side.  But there is an old adage that possession is 9/10s of the law.  Where zip is in possession of the erroneously advanced funds, zip has an advantage.  This advantage simply disappears where the facts support a correcting entry by the taxing authority.

But the combination of possession and institutional confusion (and even chaos) at least creates a possibility that CitiMortgage will never seek to reverse the payment.

*

More than two decades ago, while I was in the mortgage banking business, I had an acquaintance who worked for a large New England bank in their settlements department.  At some point in discussing with him what exactly he did for the bank, he explained that he sought to resolve transactions which seemed not to properly settle or for which there seemed to be some indication of an accounting error, but the nature of which couldn't be readily resolved.

He told me that the bank had reserved hundreds of thousands (or perhaps it was millions of dollars) to fund and resolve settlements for which the resolution was not obvious and which could not be readily ascertained.

Imagining zip's quandary within this context, think about what happens when the borrower whose tax payment WASN'T PAID complains to the bank.  After a brief inquiry, the bank ascertains that the money was collected from the borrower but the borrower's tax bill was NOT paid.  CitiMortgage then pays the borrower's tax bill.  This is the EASY part of the resolution.

Now what SHOULD HAPPEN is they should then continue looking to find out WHAT HAPPENED to the money taken from the escrow which was misapplied to zip tax bill.  This ought to lead them to the erroneous payment of zip's taxes.  But depending upon the competence and conscientiousness of the employee assigned to run this down, they MIGHT quickly find this payment.  But they MIGHT NOT.

How easily the problem can be discovered and corrected depends upon (a) the nature of the original error, (b) the organization and thoroughness of the bank's recordkeeping, (c) the bank's business practices, (d) the thoroughness, competence and dedication of the employee assigned to track down the error, and (e) the supervisory environment and climate.

You need to allow for the possibility that some manager says, in essence, "We don't have time to look into that any more right now.  Here are 500 more perjured affidavits were need to you robo-sign!"

While we would like to think that a bank's accounting and bookkeeping properly BALANCES every business day, this is simply NOT the case, any more than the likelihood that every supermarket cashier's cash drawer exactly balances at the end of each shift.  Errors happen.  Large errors are usually resolved.  Small errors are often written off

Employees who persistently are found to make errors which exceed some standard are usually terminated.

While $1,000 to $5,000 seems like a LARGE error, in mortgage banking, these errors are often viewed as missing pennies from a cash register.  The servicer may very well elect to simply MOVE ON and might NEVER seek to recover these funds UNLESS it is brought specifically to their attention with ALL of the precise details and facts.

I really am NOT disagreeing that pursuing the facts and seeking to correct the error makes sense.  But then I would also ask you, HOW MANY HOURS should zip spend seeking to understand and/or resolve this error which zip did NOT create?

The bank settlement department described by my friend had a policy that the bank would NOT spend an uneconomic amount of time trying to figure out how to resolve these settlement problems.  Instead, they reserved for payment of the uncertain amount and WAITED for someone to turn up asking for the money.  They would then demand sufficient documentation to both establish the nature of and to resolve the error.  In short, they shifted the burden of resolving the settlement error to the affected parties.

Keeping the money and waiting for someone to ask for it back is the consumer equivalent!

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Sara
William A. Roper, Jr. wrote:

The letter might say something like:

"W. Ropre
PO Box 123
NY, NY

Dear CitiMortgage:

Thank you for your generosity in paying my real estate taxes for tax year 2009.  This was a very touching and thoughtful gesture, particularly in the face of both our nation's financial adversity and the troubles faced by your own parent financial institution.  Your generous payment of taxes on my behalf seems to indicate that you are applying federal TARP bailout money and the ongoing implicit bailout of the Fed's QE2 program to help relieve the financial adversity of people like me.

I saw from President Obama's State of the Union message that it is very important for consumers to begin spending money to help revive the economy after the collapse that your institution and other Too Big Too Fail banks caused.

In the spirit of the President's guidance, I have booked a Caribbean cruise on a U.S. flagged vessel and will spend the cash flow freed by your voluntary payment of my taxes right away.

If you want to pay my property taxes again next year, this is OK, but in an abundance of caution, I am going to refrain from acceptance of such a gift for three consecutive years.

Again, thank you for your generosity.  Your payment of taxes on my behalf was an unexpected windfall.

Sincerely,

W. Roepr

P.S. -- I do not have a bank account at Citibank or a mortgage with CitiMortgage.  While I can see that many would appreciate your generosity and gesture and might be inclined to bank with you in the future, I do not need a mortgage and, being conservative and cautious, do not place deposits in banks that simply give money away (even to me) or which are likely to fail and require further taxpayer bailout.  I hope this candid postscript doesn't make me appear ungrateful."


I would sign the letter only with my first initial "W", which I would scribble in an undecipherable way.

I would save a copy of the letter and my certified mail return receipt to use defensively whenever they come around asking for the return of the amount.

I would view the cost of the postage as a slightly better bet than a lottery ticket!  (I would keep the funds available, rather than taking a cruise.)

If the tax collector has misapplied the payment, then I would EXPECT the transaction to be reversed.  If CitiMortgage has erroneously paid my taxes, I would expect them to remain confused, possibly for some time.  They will be even MORE confused after the enterprise fails completely and is broken up!


I laughed while reading this draft!!!  William, your sense of humor is dabomb!  But, your point comes across...

I'm glad to hear that  this wasn't quite what I thought it might be.

S
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UnregisteredNJ

I stumbled across this thread and had a really good chuckle.  Mr. Roper had a pretty good sense of humor in addition to his understanding of the law.  I see why others miss him.

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J

UnregisteredNJ
quote: "Mr. Roper had a pretty good sense of humor in addition to his understanding of the law. I see why others miss him."

 

right on point UnregisteredNJ, right on point!

Quote 0 0
Carissa
Does adverse possession apply in the foreclosure context?  Home went into foreclosure in 2008, my daughter not on deed started paying the property taxes in 2008 and wanted to save house.  Deeded the house to daughter in 2009. Still fighting with the bank, but daughter has lived in home since 08, made improvements and is still paying the property taxes in 2012. Not sure if this is adverse to the bank or not since she is legal title owner since 2009, but thought I'd ask anyway.
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Walt

Quote:
Does adverse possession apply in the foreclosure context? Home went into foreclosure in 2008, my daughter not on deed started paying the property taxes in 2008 and wanted to save house. Deeded the house to daughter in 2009. Still fighting with the bank, but daughter has lived in home since 08, made improvements and is still paying the property taxes in 2012. Not sure if this is adverse to the bank or not since she is legal title owner since 2009, but thought I'd ask anyway.

 

Laws on adverse possession vary widely from state to state as to both the requisite time period, as well as the specific requisites which would entitle a claimant to perfect title through such adverse possession.

 

Some states have differing periods for perfecting the interest based upon different kinds of claims.  For example, someone possessing under a wild or questionable deed might obtain title sooner than someone with no deed at all.

 

Case law also differs as to precisely the sort of open and notorious possession to the exclusion of the otherwise rightful owner is actually required.

 

Generally, the time periods required are much longer than that you describe and the facts you recite seem to be very weak.  Since the periods to obtain title by adverse possession tend to run fairly long, it is usually quite unlikely that a claim could be perfected before a foreclosure was completed.  If the lender waited for a lengthy period of time, there would more likely be a limitations defense under the note or a laches equitable defenses under the mortgage well before a claim for adverse possession could arise.  

 

Look to the statutes and cases for your jurisdiction for a better understanding of the rights in respect of the facts in your case.  Discuss the matter with an experienced real estate attorney.  But I do not want to come across as overly hopeful or encouraging.  While there may be some legitimate foreclosure defenses available, I am highly doubtful that adverse possession of a stranger is going to be amongst these. 

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