OPINION Thanks to a shadowy corporate mortgage recording system, millions of Californians have no idea who owns their home loans.
As we suffer through this recession triggered by reckless subprime lending and Wall Street speculation, our recovery is being held back in part because people are struggling with foreclosures and underwater home values — exacerbated by a lack of mortgage transparency.
The mess created by Wall Street is causing wrongful foreclosures and wreaking havoc. Real people — often lower-income families and communities of color — are enduring the devastation of foreclosure processes because of the excesses of bankers and investment firms.
In San Francisco, we've seen the highest number of foreclosures in the Ingleside-Excelsior, Bayview, Tenderloin, and Mission neighborhoods — many of the places where home values have fallen most. Whether or not you face foreclosure, we all pay for this crisis by losing vital tax revenue that could go to support our schools, protect our neighborhoods, or build our economy.
When Wall Street realized it could make billions by bundling mortgages and selling them to investors, banks and financial institutions needed a way around recording the ownership and assignment of home loans. What the banks and Wall Street came up with is a shadowy, industry-backed reporting system called MERS — mortgage electronic reporting system.
Simply stated, subprime and predatory lending allowed banks to create millions of questionable mortgages, Wall Street bundled these risky mortgages together to sell to investors, and MERS made it quicker and easier to conduct these risky transactions with impunity.
As San Francisco's assessor-recorder and a financial advocate for low-income communities, we have seen harmful industry practices wreak havoc on families trying to stay in their homes — whether by use of MERS that clouds property titles, wrongful foreclosures, or denied loan modifications.
The state Legislature considered several good foreclosure bills this year. One proposal placed a $20,000 fee on financial institutions attempting a foreclosure. This would have discouraged foreclosure and helped defray costs to communities if the process went ahead.
State Sen. Mark Leno( D-SF) and Senate President pro tem Darrell Steinberg (D-Sacramento) offered legislation stopping banks from proceeding with foreclosures when a homeowner is attempting to modify his or her mortgage.
Assessor-Recorder Ting is sponsoring a bill requiring that all mortgage assignments and transfers be recorded with counties, thus taking this process out of the murky MERS system.
Unfortunately, the banks and their armies of lawyers and lobbyists have been able to stymie these reforms.
We must continue to fight these wealthy, powerful lobbies so that the long road to recovery in our housing markets and communities can begin. We cannot let Sacramento forget it was financial institutions that fueled the housing bubble, crashed the stock market, and sent shockwaves throughout the economy with their reckless practices.
Few states have been ravaged by subprime lending and the meltdown of mortgage-backed securities the way California has, so we must continue reforming the practices of banks and Wall Street that have thrown our economy and communities into turmoil.
Phil Ting is San Francisco assessor-recorder. Kevin Stein works with the California Reinvestment Coalition.