How Joseph Lents Dodged Foreclosure for Eight Years and Started a Movement

In 2002, an accountant in Boca Raton, Florida, named Joseph Lents was accused of securities-law violations by the U.S. Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice- recognition software company, had sold shares in the public company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage.


The loan servicer, Washington Mutual Inc., tried to foreclose on his home in 2003 but was never able to produce Lents’s promissory note, so the state circuit court for Palm Beach County dismissed the case. Next, the buyer of the loan, DLJ Mortgage Capital, stepped in with another foreclosure proceeding. DLJ claimed to have lost the promissory note in interoffice mail. Lents was dubious.

“When you say you lose a $1.5 million negotiable instrument -- that doesn’t happen,” he said in an interview in Bloomberg Businessweek’s Oct. 25 issue.

DLJ claimed that its word was as good as paper. But at least in Palm Beach County, paper still rules. If his mortgage holder couldn’t prove it held his mortgage, it couldn’t foreclose.

Eight years after defaulting, Lents still hasn’t made a payment or been forced out of his house. DLJ, whose parent, Credit Suisse Group AG, declined to comment for this story, still hasn’t proved its ownership to the satisfaction of the court. Lents’s debt has grown to about $2.5 million, including unpaid taxes, interest and penalties.

The Lents Defense

As the stalemate grinds on, Lents has the comfort of knowing he’s no longer alone. When he began demanding to see the IOU, he says, “I was looked upon like I had leprosy. Now, I have probably 20 to 30 people a month come to me” asking for advice. Lents is irked when people accuse him of exploiting a loophole. “It’s not a loophole,” he says. “It’s the law.”

The Lents Defense, as it might be called, doesn’t work everywhere. Thousands of Floridians have lost their homes in lightning-fast “rocket dockets.” In 27 other states, judges don’t even review foreclosures, making it harder for homeowners to fight back. Now, allegations of carelessness and outright fraud in foreclosures have become so widespread that attorneys general in all 50 states are investigating. So are the feds.

Read on.