House Stealing: Tickerguy’s Perspective
by Karl Denninger
Most of you have probably heard by now about the family that was foreclosed on in California, their home was resold, refurbished, and they then effectively “stole it back” with their attorney and a locksmith breaking in and re-taking possession.
Conejo Capital Partners has published “the other side of the story”, and it makes several good points – some of which I believe deserve exposition and discussion:
On January 28, 2010 the property was sold thru a public auction at the trustee sale held at the Ventura County Court House. Each month this same process occurs thousands of times across the nation as a method for banks to take back or dispose of the property that is not being paid for. Conejo Capital was the “successful” bidder. Shortly thereafter the former bank issued the title and it was legally recorded with Conejo Capital Partners LLC as the new owner of the property. At the time all we knew about the property was that the former homeowners purchased it in 2001 for $539,000, and that they later refinanced it, pulling equity out, resulting in debt of roughly $1,000,000.
We start here. How do we wind up with someone who purchased a home for $500,000 then pulling another $500,000 in what amounts to phantom equity out?
Well, that’s simple: We had Wall Street banks that were more than happy to trade on this phantom, false, and maliciously-inflated “equity”, driven by a central bank and cronies in Washington DC that were all too happy to look the other way at rampant lawlessness for nearly a decade.