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Faulty Foreclosures Present
Systematic Breakdown and Big Risks
for Buyers
Editor’s Comment:
The reality of the system of wrongful foreclosures is being revealed piece by piece as officials examine the filings from pretender lenders. It is plainly obvious that even the “technical” so-called errors are revealing systemic fraud. The result has been people laughing all the way to the bank, with property title in hand that carries presumptions of authenticity simply because it resulted from a foreclosure auction — even if the auction was faked, rigged and a credit bid from a non-creditor was accepted.
Nobody is saying yet that 80% of the foreclosures were so wrong that the property title should revert to the foreclosed homeowner and that those who thought they had title arising out of the foreclosure or from a bank or REO company (another layer controlled by the banks) are in for a rude awakening. Sorting out these title problems will be a virtual industry in coming years as homeowners, illegally foreclosed and evicted from their homes start making claims in larger numbers for return of title and possession. There are many who have already done so and been awarded both title and possession.
The writing is on the wall and those who don’t read it do so at their own peril. Many people who rode out the recession with money in the bank are buying up properties and renting them out. If the property legally still belongs to the original homeowner, then the title, the possession and possibly the rent collected may be the source of considerable liability for people who think that wrongful foreclosures are not their problem. They would be right if they obtained title as a bona a fide third party purchaser for value — without notice — but the information about fraudulent foreclosures has been in the public domain and the tracing of title is fairly easy if you stick to the simple requirements of law.
The culprit in these resales of “foreclosed” property are the title insurers, some of whom were active players in MERS. They are smart enough to avoid liability arising from claimed securitization of loans that were never actually securitized and were never properly documented. The relevance is that strangers to the transaction were the source of foreclosures and alleged modification procedures on loans they neither owned, funded, nor did they possess any agency authority to do anything on behalf of undisclosed principals.
There are those who have successfully negotiated the proper terms of exclusions and exemptions in title policies, but they are few and far between. The fact is the title company will deny that their contract for insurance ever covered the securitization risk because they specifically excluded it from the policy. The only real possibility of holding the title companies liable is through their agents who produced a title report. That may well be a novel issue in litigation.
So the message for people in the business of buying foreclosure properties is to use an attorney who understands the process of securitization, who knows how to protect your rights when the old homeowner comes back with claims and who is willing to negotiate with the title underwriter for a policy that is worth the paper it is written on. Remember, if it looks too good to be true, it probably is too good to be true.
The banks and government are trying to paper over the problem with a whole layer of third party purchasers so they can claim later that the homeowner can only claim monetary damages. But the law is clear in most states. You can’t deprive someone of title to their own property by fiat. If it were otherwise then the moral hazard we have already seen played out in the housing market will get worse as more and more players enter the market knowing that the worst that can happen is they might need to settle with the old owner for money. Our economy depends upon certainty of title and there are rules about how we establish that certainty. Those rules were broken by the banks and now they must be subjected to the consequences of those actions.
The bottom line is why should a perfect stranger be allowed to take your property and then be allowed to claim that they were somehow allowed to use fabricated documents containing false and fraudulent declarations of fact, forgeries, and misrepresentation of authority. Homeowners were thus led down a rabbit hole where they thought they were seeking modifications from authorised parties, they thought they were paying the right parties, they thought they owed money when the money had already been paid. The answer from the banks, servicers and others who participated in these false transactions is forget about it.
High error rate in S.F. foreclosure study means
trouble for state
Originally published Saturday, March 3, 2012
The review found that signatures of some original owners of loans were missing and that affidavits were not filed showing lenders had contacted borrowers to discuss their options 30 days before a mortgage default notice.
The Associated Press
SAN FRANCISCO — More than 80 percent of residential mortgage loans that have gone into foreclosure in San Francisco have missing documents or signatures or otherwise violate the law, according to a review ordered by the city assessor.
The results hint at potentially broader problems with how foreclosures have been handled since the collapse of the housing market.
While many of the errors were technical and related to paperwork, the problem shows the state needs to change its antiquated real-estate regulations, Assessor-Recorder Phil Ting said.
“The whole process … is absolutely, 100 percent broken and not working for any of us at this time,” Ting said. “These rules were made for people who walked or rode their horse to the bank.”
The review found that signatures of some original owners of loans were missing and that affidavits were not filed showing lenders had contacted borrowers to discuss their options 30 days before a mortgage default notice.
The review was conducted by Newport Beach-based Aequitas Compliance Solutions. The company looked at 382 of the city’s 2,405 foreclosure sales between January 2009 and October 2011.
The report said it was possible that homeowners were accused of defaulting on loans that they had never agreed to in the first place, and were being foreclosed by lenders that didn’t own the loans.
“How can we expect homeowners to have a fighting chance of saving their homes when they can’t even find who currently owns their debt?” Ting said in a statement.
The report was not aimed at individual lenders, but the system in general. It suggests similar problems could be found elsewhere in the state, Ting said.
He said it would be up to the District Attorney’s Office and state Attorney General’s Office to determine whether the violations were prosecutable.
Richard Green, director of the University of Southern California’s Lusk Center for Real Estate, said he would like to see similar audits done in other California cities to confirm San Francisco is not an isolated case.
But considering the high rate of errors with foreclosures in the city, which suffered a comparatively mild downturn when the housing bubble burst, Green said he would not be surprised if the audit’s findings foretold a broader problem.
“Mistakes happen. But it’s the robustness of this happening. It’s that it’s happening over and over again,” he said.
Tags: 60 minutes, affidavits • attesting • Daniel Edstrom • DTC-Systems • fabricating • false information • false sworn documents • foreclose • illicit business practices • improper statements • imp, AHMSI, appraisal fraud, attorney general, auction fraud, Chris Koster, credit bids, DocX Indictment, foreclosure fraud, FORECLOSURE SETTLEMENT, foreclosures, forgery, housing market, housing prices, investors, linda green, LPS, Missouri, mortgage fruad, mortgages, Robo-Signing, settlement, strategic default, Wells Fargo
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