Guardian editorial: SF should go after mortgage criminals

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EDITORIAL The mortgage crisis in San Francisco isn't just devastating to homeowners and to the southeast neighborhoods where foreclosures are most common — it's clear evidence that lenders and their affiliates are and have been acting illegally. This city ought to be taking the lead on pressing civil and criminal charges against the mortgage outfits.

City Assessor Phil Ting commissioned a report in February that showed that nearly every one of 382 foreclosures actions in the city between January 2009 and October 2011 had at least some irregularities. In more than 80 percent of the cases, the report identified direct violations of law.

It's a stunning revelation: In nearly 100 percent of the cases studied, the mortgage companies did something wrong. Homeowners were not notified that they were in default. Properties were seized and sold by companies that didn't have the proper title to them. Documents were backdated or signed by an entity that didn't have the authority to sign. In some cases, it wasn't clear who actually owned the mortgage, because the corporation that filed for foreclosure had never property taken title to the loan.

The report comes as Occupy protesters in San Francisco are moving aggressively to target banks that are tossing people out of their homes and at a time when county sheriffs in other parts of the country are refusing to execute foreclosure orders.

There may not be much San Francisco Sheriff Ross Mirkarimi can do — mortgage foreclosures in California can be done with almost no oversight and by the time the sheriff is called in there's nothing left but an eviction. But the report makes clear that there were both violations of business regulations and crimes, in some cases felony crimes — and the San Francisco city attorney and district attorney should be moving as quickly as possible to take legal action.

Both City Attorney Dennis Herrera and District Attorney George Gascon have asked for more material from Ting's office, although neither has announced a formal investigation. But every day that this goes on, more people lose their homes and more crimes are committed — and both offices should move as quickly as possible to take action.

There's nothing in the federal settlement over fraudulent mortgage activity that prevents local officials from taking this sort of action. There's nothing preventing Herrera from seeking an injunction against further foreclosures or preventing Gascon from indicting the lenders and their executives.

Meanwhile, Ting told us that he's asking Attorney General Kamala Harris to investigate, because the pattern of violations almost certainly goes beyond San Francisco.

State Sen. Mark DeSaulnier has introduced a bill that would mandate transparency in foreclosures, so at least homeowners would know who to contact to seek a modification. That's a good start. But holding these sleazy operators accountable would send a message that San Francisco isn't going to let this sort of behavior continue.

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Comments

so what you are talking about here are technicalities with the foreclosure process. And yes, sure, there may have been some omissions like the odd disclosure not sent here, or some i's not dotted and t's not crossed. But in the end these people got evicted from their homes because they didn't pay their debts.

Let's not lose track of where the real problems lie. If you don't pay your mortgage, your home is at risk - it's written on every mortgage application form.

Posted by Anonymous on Feb. 29, 2012 @ 9:20 am

"...what you are talking about here are technicalities with the foreclosure process."

I doubt a judge would consider a forged note to be a foreclosure technicality.

Posted by Guest on Feb. 29, 2012 @ 3:13 pm

I'd agree with you that the paperwork and bureaucracy should be done right.

But if someone is in default, they need to be kicked out as quickly as possible. Some corners may have been cut, but nobody who paid their debts has anything to fear.

I for one am sick of hearing about these millions of people who get to live in their homes for years after they stop paying. What message does that send to those of us who make the sacrifice each month to pay our bills?

Posted by Anonymous on Feb. 29, 2012 @ 3:18 pm

A real estate note is a "negotiable instrument" meaning it is just like money. Don't lose it and if you do lose it, don't forge it. It is just like forging any other kind of money and "technically" the penalty is decades in federal prison, which is where nearly every banker in the world "technically" belongs for note forgery. Why not just print money from your computer printer?

Posted by Guest on Feb. 29, 2012 @ 3:23 pm

figure that out between themselves later. It really doesn't affect the homeowner who wasn't paying his mortgage. Regardless of who held the note, somebody not making payments is going to get evicted, and rightly so. The rest is just bookkeeping.

Posted by Anonymous on Feb. 29, 2012 @ 3:32 pm

Technicalities....

Technically, if you purchase a mortgage backed security from a bank, and the mortgage that actually backs the security (hint: the reason they are called mortgage backed securities is because they are backed by mortgages) goes into foreclosure, then "technically" the bank has to buy back the security.

Technically, banks have to repurchase all these securities based on bad mortgages.

Why is that not happening? Because the federal government is not requiring the banks to take back the mortgages. Because ultimately every bank would go bankrupt. EVERY BANK.

Same principle with home owners. If banks require every homeowner to pay underwater mortgages, ultimately every home owner will go bankrupt. EVERY HOMEOWNER.

Posted by Guest on Feb. 29, 2012 @ 3:47 pm

the vast majority of homeowners continue to pay their mortgages.

Of course, if millions of debtors are allowed to live for years in their homes without paying a penny, as you appear to think, then the banks will require such large subsidies that we may all end up broke.

The banks aren't requiring defaulting "homeowners to pay underwater mortgages" at all. They are simply saying that, if they don't pay, then they will lose their home. Exactly as you'd expect.

Posted by Anonymous on Feb. 29, 2012 @ 4:52 pm

Which is why the gubbment is covering all those MBS the bank are liable for.

Posted by Guest on Feb. 29, 2012 @ 9:05 pm

Banks and mortgage companies have committed massive, "industrial-sized fraud", as Mike Whitney puts it in his piece "Why Hasn't Anyone Gone to Jail" @CounterPunch. This is a serious crime, not simply a matter of "some omissions like the odd disclosure not sent here, or some i's not dotted and t's not crossed" as Anonymous claims. Everyone should be aware of the terms in the "50-state mortgage foreclosure settlement" because it's just another means of enriching the banks at the expense of the taxpayers~

"Under the terms of the 50-state mortgage foreclosure settlement, US taxpayers could end up paying billions in penalties that were supposed to be paid by the banks. That’s the gist of a front-page story which appeared in the Financial Times on Thursday, February 17. The widely-cited article by Shahien Nasiripour notes that the 5 banks that will be effected by the settlement — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial – will be able to use Obama’s mortgage modification program (HAMP) to reduce loan balances and “receive cash payments of up to 63 cents on the dollar for every dollar of loan principal forgiven.”

"And that’s not all. If borrowers stay current on their payments after their loans are restructured, the banks could qualify for additional government funds which (according to the FT) “could then turn a profit for the banks according to people familiar with the settlement terms.”

"How do you like them apples? Leave it to the bank-friendly Obama administration to turn a penalty into a windfall. In effect, the settlement will help the banks avoid losses on mortgages that are vastly overpriced on their books and which were probably headed into foreclosure anyway. [...]

"Keep in mind, that the banks are really only on the hook for $5 billion in cash. The rest of the $25 billion settlement will be shrugged off onto investors in mortgage-backed securities (MBS) many of who are retirees and pensioners. They’re going to get clobbered while the perpetrators of this nationwide crime walk away Scott-free."

http://www.counterpunch.org/2012/02/21/why-hasnt-anyone-gone-to-jail/

Posted by Lisa on Feb. 29, 2012 @ 5:28 pm

everywhere i.e. bnaks, appraisers, realtors, brokers and - don't forget - greedy borrowers who used their home as an ATM.

Most of the loans were fraudulant - theyw ere simply unwise by all parties. And there is no justification for letting millions of people to live for free forever - that's just rewarding the slackers and losers.

We need to clear up the backlog of underwater homes and mortgages, find new buyers for them, recapitalise the banks and move on, The rest is just the usual suspects whining.

Posted by Anonymous on Feb. 29, 2012 @ 5:57 pm

‶recapitalise the banks″

You mean like issue stock for the pension funds because not sure they are into the mortgage bond thing anymore. The computer printer...

Posted by Guest on Feb. 29, 2012 @ 9:15 pm

I was closed on and I tell you what... they took my money and kept it all. You can't. Do that! If you change your mind, you haveto pay a penlty for cancelling the contract. Not only did midwest mortgage, aka jackson co. Farmers llc not do that, the kept the money they took for the property. They have to give back that 11k plus.... so now those crooks got my money, the house but also away scott free. The cops could have done aomething. Like arest those folk for robbery but they attacked me instead. Where are the occupy folk sleeping? I'm broke and homeless too!! Tracefromks@aol.com sent thiz.

Posted by Guest on Feb. 29, 2012 @ 6:39 pm

Because there aren't enough prisons?

http://www.huffingtonpost.com/2012/02/28/wall-street-psychopaths_n_13071...

One Out Of Every Ten Wall Street Employees Is A Psychopath, Say Researchers

Posted by Guest on Feb. 29, 2012 @ 9:35 pm

“You’ve got to have a sense of perspective, and these guys don’t have it,”

http://current.com/shows/the-young-turks/videos/wall-street-bonuses-drop...

Wall Street bonuses drop 14 percent, so bankers cry about losing Aspen vacation homes

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