Report Finds Systemic Foreclosure Irregularities

By Tanya Dennis San Francisco County officials recently turned over an audit report to Attorney General Kamala Harris and the San Francisco District Attorney last week regularities in 99 percent of foreclosed homes that were audited. The study, commissioned by Assessor-Recorder Phil Ting, and compiled by Aequitas Compliance Solutions, a mortgage regulatory compliance firm, revealed that in approximately 400 foreclosures, suspicious documentation or legal violation was discovered in 99 percent of the cases, many with four or more irregularities. The study reveals systematic abuse of homeowners by the banks. “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest,” said Kathleen Engel, a professor at Suffolk University Law School in Boston. State attorneys general recently reached a $26 billion settlement regarding foreclosure improprieties. The settlement, however, did not close the door on future legal action on many outstanding matters, the audit report said. “The settlement does not resolve most of the issues this report identifies nor immunizes lenders and servicers from a host of potential liabilities,” according to the report. The study found banks filed false documents, though it is a felony to knowingly file false documents in California. Further, the study discovered transfers of loans that were made by entities that had no right to assign them, while banks took back properties in auctions without proving they owned the property. Ting’s report is the first detailed analysis of foreclosure improprieties in California, casting doubt on the validity of almost every foreclosure examined. “Clearly, we need to set up a process where lenders are following every part of the law,” Ting said. “It is very apparent that the system is broken from many different vantage points.” Aequitas Compliance Solutions, a mortgage regulatory compliance firm, did not identify specific banks involved in the irregularities. However, the report contradicted a position taken by many banks that foreclosure improprieties did little harm because borrowers were behind on their mortgages and would have been evicted anyway. “We can deduce from the public evidence that there are indeed legitimate victims in the mortgage crisis. Whether these homeowners are systematically being deprived of legal safeguards and due process rights is an important question,” according to the report. The auditors say their report paints an “accurate picture” of the mortgage industry’s failure to comply with California’s foreclosure laws. California Attorney General Kamala Harris said Ting’s report provides additional ammunition to overhaul the process. “We knew that there was misconduct, and this is further evidence of that,” she said.
Share Button
Print Friendly

Filed under: Articles

Comments are closed.