Well, the first publicized subprime casualty on Martha's Vineyard was revealed today in an article reporting that the Town of West Tisbury has initiated a lawsuit against two subprime lenders, Saxon Mortgage Services and Fremont Investment and Loan.
This suit is an attempt to correct an error by the town's attorney when preparing the legal papers for the town's Affordable Housing Committee. The property that the committee awards to those needing an affordable house is intended to remain affordable in perpetuity. Well, intent is one thing, action another. When the mortgage company foreclosed on the property on which it had loaned almost $600,000, the clause leaving the house affordable in perpetuity apparently went out the window.
Now the Town is trying to get the house back in the affordable inventory by placing correct restrictive covenants on any transfer of the property. I'm not a lawyer, but it sounds as though they have little chance of winning. However, the chances of running up a good sized legal bill are very good.
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