BY BAILEY HARRIS

Local newspapers in Florida have been filled with stories of mortgage borrowers who are squatting in homes that they previously made payments on. Some of these homes are in excellent neighborhoods on the waterfront; many of them are mortgaged for $1 million or more.

But it's not just happening in Florida, it's happening all over the country.

So how are people getting away with living the high life and not paying one penny for it?

The answer varies. Some people have been able to avoid foreclosure through technicalities alone. A good example is a resourceful fellow in Boca Raton, Florida named Joe Lents, who has prevented the bank from foreclosing on his $1.5 home since 2002. Every time Lents is served with papers, he asks for proof of who owns the note.

Since his lender (and so many others) pooled loans into mortgage securities and sold them multiple times without keeping track of the paperwork, it is very difficult to tell who actually owns the mortgage.

Hundreds of foreclosure court cases like Joe Lents' have been dismissed in at least five states because banks and investors are unable to prove who owns the mortgages in question. There are many borrowers and lawyers across the country that are becoming savvy to the confusion and are seizing it as a way to avoid foreclosure.

In other mortgage squatter cases, borrowers are simply able to take advantage of a slow-moving and cash-strapped system. Courts are so backed up that it can take upwards of eight to ten months for the bank to get a court date in some areas. And that's if the bank actually wants to foreclose.

Some lenders are more than willing to take the wait-and-see approach because foreclosing doesn't make good financial sense at this point. Homes aren't worth what they were a year or two ago.

It is becoming all but impossible for a lender to sell a foreclosed home and recoup what is owed on the loan on top of the money spent on foreclosure proceedings. And with so many bad loans already on the books, many banks are unwilling to be honest with their shareholders and mark down million dollar homes on the balance sheet.

There is also some speculation that there is a postponement phenomenon in the works so banks can transfer risk on smaller loans to government sponsored entities. Loans that are not 'officially in default' might still be guaranteed by organizations like Fannie Mae and Freddie Mac.