Queen of the Deadbeats

During the current foreclosure crisis, there have been plenty of stories about lenders who "outsourced" much of the work to incompetent processing firms, resulting in badly botched paperwork and illegal property seizures.

Now, meet the other side of that story--deadbeat borrowers who manipulate the system to avoid making payments and foreclosure on their property. In fact, The Wall Street Journal has located a woman who might be described as poster girl for feckless homeowners. Meet Patsy Campbell:

The 71-year-old retired insurance saleswoman has been living in her house, a two-story on a half acre in a tidy middle-class neighborhood here in central Florida, since 1978. The last time she made a mortgage payment was October 1985.

And yet Ms. Campbell has been able to keep her house, protected by a 105-pound pit bull named Dodger and a locked, rusty gate advising visitors to beware of the dog.

"They're not going to take this house," says Ms. Campbell. "I intend to stay in this house and maintain it as my residence until I die."

Ms. Campbell's foreclosure case has outlasted two marriages, three recessions and four presidents. She has seen seven great-grandchildren born, plum real-estate markets come and go and the ownership of her mortgage change six times. Many Florida real-estate lawyers say it is the longest-lasting foreclosure case they have ever heard of.

The story of how Ms. Campbell has managed to avoid both paying her mortgage and losing her home, which is currently assessed at more than $203,000, is a cautionary tale for lenders that cut corners and followed sloppy practices when originating, processing and servicing mortgages. Lenders are especially vulnerable in the 23 states, including Florida, that require foreclosures to be approved by a judge.

According to the WSJ, Campbell has challenged her foreclosure on the grounds that her mortgage was improperly transferred between banks and federal agencies; that lawyers for the bank waited too long to prosecute her case, and that a state law shields her from all debts. And that's just for starters. In various legal proceedings down through the years, Campbell has offered countless other arguments as well. At various points, judges have agreed that her arguments have some merit, staving off foreclosure.

The saga actually began back in 1978, when the property was originally purchased by Paul Campbell, a pharmacist in Okeechobee, Florida. He took out a $68,000 mortgage to finance the purchase. Mr. Campbell married Patsy in 1980 and died later that year of emphysema. Five years later, Mrs. Campbell stopped making payments on the house after (she says) an illness caused her to lose income and fall behind on her bills.

Since then, the foreclosure mess has continued through Campbell's second marriage, the birth of multiple great-grandchildren, five presidential administrations and six different mortgage companies. Currently, she owes $68,801 in principal on the loan, plus $148,000 in interest. The firm that now owns her mortgage, Commercial Services of Perry, Florida, says it would be happy to settle the case--if Ms. Campbell will simply pay what she owes: $211,801.

As you might expect, Patsy Campbell has no intention of paying that note. She claims that no one owns her note, because of lender fraud and mistakes made when the mortgage was transferred on multiple occasions. Ms. Campbell plans to continue her fight; the attorney for Commercial Services says he receives a new appeals filing from the homeowner almost monthly, creating more delays, paperwork and expenses.

Thankfully, cases like Ms. Campbell's are rare. But it does provide a reminder: there are unscrupulous property owners who use system to avoid paying their mortgage, a fraud that everyone else pays for.