Wednesday, March 30, 2011

Some Washington State Homeowners Fall For Pitch Peddling Foreclosure Defense 'Strategy' Asserting 'Sweat Equity' Liens Against Lenders

The Seattle Times reports:
  • Fueled by a strange cocktail of legal theories, some Puget Sound-area homeowners facing foreclosure are slapping their lenders with multimillion-dollar "sweat equity" counterclaims and other measures promoted by shadowy consultants.
  • But the maneuvers may only deepen the financial and legal difficulties of struggling borrowers. "No reason to waste the money," said a former Monroe homeowner named Jeff, who paid $4,000 to a firm claiming it could avert foreclosure of the home on which he owed about $650,000. His "sweat equity" claim that the lender owed him $2.62 million "actually did no good," said Jeff, who discussed his financial problems on condition his last name not be used. "I don't think it postponed (the foreclosure) a single day."
  • The latest rash of such filings originates with a firm called Equitas Solutions, whose website lists a post-office box in Lakewood, Pierce County, but no phone number and no working email.
  • At least a dozen local homeowners in recent months have staked out large "sweat equity" claims, all seemingly working from the same Equitas script: First they record a Uniform Commercial Code (UCC) filing with the state Department of Licensing, then a so-called "lis pendens" document with the county recorder's office asserting that litigation on the property is pending.
  • The documents are peppered with quaint, quasilegalistic phrases, in one spot demanding payment be made "in lawful money of the United States, a dollar being described in the 1792 US Coinage Act as 371.25 grains of fine silver, or the equivalent of gold, notes or other instruments acceptable to claimant."
  • Several Equitas clients followed up their UCC claims with lawsuits in federal court, acting as their own lawyers. Using virtually identical language, they've filed voluminous documents that, among other things, challenge the constitutionality of the state law allowing lenders to foreclose on deeds of trust without going to court.

For more, see Borrowers facing foreclosure try dubious 'sweat equity' claims.