“Walkaway” Mortgage Deadbeats Jailed in California


Posted by Julio Martinez-Clark on May 28, 2008 at 06:04:58:

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.”


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