The new $26 billion mortgage settlement agreement between state attorneys general and major banks will help make restitution to millions of homeowners defrauded and damaged by lenders. But justice requires more than compensating the past victims -- we must protect Californians from future abuse, improve laws regulating foreclosure and ensure they are enforced.
While we all knew the problems in our housing markets were severe -- just how severe had never been thoroughly quantified until my office in San Francisco released the results last week of an independent audit of nearly 400 foreclosures over the past three years.
The audit findings show that irregularities are not just frequent -- they are pervasive.
Like just about everyone else involved in this issue, I knew there were widespread problems. But the independent audit commissioned by my office showed fully 84 percent of the foreclosure files contained at least one clear legal violation and more than 66 percent of the files contained multiple violations. Nearly 60 percent of documents were backdated in some fashion, which is significant in an environment in which documents are filed under penalty of perjury. As far as we know, this is the first comprehensive audit of foreclosure files.
Why does this matter so much? First of all, the widespread fraud in mortgage lending and documentation that led to the epidemic in foreclosures was abetted by lax legal and regulatory standards that failed to spot, stop and prevent abuse.
Here in California these lax standards are particularly damaging because lenders (and the subsequent mortgage holders who frequently acquire loans) do not need to seek a court order to force a foreclosure. With little direct court oversight, we must rely on the administrative procedures and state regulations to protect owners from fraud.
This matters because families facing foreclosures are entitled to know exactly who holds their loan and to see for certain that the foreclosure is justified. In one case, our audit showed a foreclosure initiated by a party that had no title to the property -- and in a number of other cases, we found two competing claims to the title.
This new data matters to all of us because the wave of foreclosures that broke over California affected every single Californian, not just those losing their homes. The massive loss of housing value meant we lost billions in tax revenues needed to fund our schools, protect our communities and invest in our future. And the administrative and recovery costs alone are staggering -- with some estimates showing that each foreclosure costs local cities up to $20,000 for each home.
And finally it matters because transparency matters. The state constitution created assessor-recorder offices like mine in every county because economic security and basic justice were advanced by creating clear and transparent property records.
Moving forward, it is clear that our laws and regulations need to be adapted to the new era in which mortgages are rapidly resold, split up and "securitized" to the point where it is actually hard to know who owns a home.
The attorneys general, led by our own Attorney General Kamala Harris, were the first to acknowledge that their hard-won settlement was only the first step in addressing the problem.
Criminal prosecutions are still a possibility. But legislative reforms are clearly required. As we take a look at these reforms, we now have hard data showing exactly how widespread the problem has become. This is not just some loans, or many loans. Our findings show the problem of fraud, muddled title or irregularities has spread in fact to nearly all loans.
Phil Ting is the assessor-recorder of San Francisco.
Follow Phil Ting on Twitter: www.twitter.com/philting
Only answer for the economy and the younger generations to come.
And, once the government is freed from the cackles of mortgage fund backing, they can focus more fully on global interventionism, allegedly for our own good.
But it appears that when the settle money is on the table, the governors at home are wanting to grab it -- BUT NOT GIVE ANY TO THE HOMEOWERS OR USE IT TO SOLVE THE PROBLEM. Just more political thieves.
Noticed Scott Walker tried laying claim to half WS's money the week of the announcement. When all is said and done I know plenty of foreclosees but will never see anyone that has gained from this settlement.
Interesting to me while looking at Nevada's settlement page of the "settlement" our AG had an assistant sign for her. And Mike Heid as Vice President of Wells Fargo's mortgage division signed for them. Same Mike Heid that pledged on Bloomberg radio in early 2009 to lower principal for "all Wachovia Pick a Payment customers by 20%." Guess he's just another liar as well.
First, the company that performed the "audit" also performs these bogus "forensic loan audits" aka software TILA/RESPA audits that the California's Attorney General, as well as most other Attorneys General have stated are basically scams. Mortgage Fraud Examiners was the first one to identify these audits as scams and the Attorneys General picked up on it shortly thereafter. See, http://www.prurgent.com/2011-04-21/pressrelease165977.htm
Which begs the question: why in one breath is California commenting on bogus audits and then using them? That in and of its self doesn’t pass the smell test.
Second, "securitization audits" aka “chain of title audits,” like the audit in question are basically useless as well; except maybe to just STALL a foreclosure. See,
http://www.nakedcapitalism.com/2011/05/new-homeowner-scam-mortgage-securitization-audits.html
Is this just about the government trying to make itself look good, then really about anything of real substance?
The ONLY methodology that has proven time and time again to work is the examination of the mortgage transaction for contract breaches and/or tortious conduct. See, http://neighbors.denverpost.com/viewtopic.php?f=215&t=123490692
I have a wrongful foreclosure case in the LA Federal Court and this "Local study" will give my judge room to decide in my favor as I believe judges are scared and waiting for some other brave judge to jump into the frying pan of defending the law against the banks, I know, terribly ironic but it seems to be how our legal system works! Judges want to do the right thing but need to feel comfortable in their actions. Interestingly my judge seems to be stalling a decision as he waits to see what? Some event that will give him cover? I wish I knew.
You're right to show concern over scammers offering rescue services directly to consumers. Doing so is tantamount to a fraud. However, these audits can be very effective when well-researched and prepared for a knowledgeable attorney as part of an overall legal strategy. These audits, even TILA and RESPA, are real, federal laws that were in many instances systemically violated.
Aequitas does not market or sell to homeowners. They only work with attorneys, regulators and industry. I've used them on a number of my cases and they've been instrumental to our prevailing.
I've seen very little worthwhile attack of the audit. Most rebut issues the report does not make. Either the critics did not read it or they count on most of us not reading.
On the other side, there has been much written to support the findings, including confirmation that they're consistent with other studies and explain the now-in-the-open robo-signing and falsification of documents practices. A strong defense of the report is made by well-regarded Georgetown Law professor Adam Levitin at http://www.creditslips.org/creditslips/2012/02/sf-city-audit.html.
Whatever the case, Mr. Pizante (the audits author and highly-regarded mortgage attorney who worked firsthand with banks to try to avoid this crisis) and Levitin are very knowledgeable attorneys who appear to contradict your second assertions.
What in the report did you find incorrect?
What restitution ? Some lenders were not part of any settlement like AHMSI