Do you think a groundbreaking report – showing that 84 percent of foreclosures in San Francisco over the last three years involved faulty paperwork, some of it amounting to fraud – would finally mean swift justice for victims of those crimes?
According to Assessor-Recorder Phil Ting, whose office produced the astonishing report, government action is certainly appropriate in the follow-up to the report. “There are potential legal action on behalf of the attorney general and potential policy solutions at the state level,” said Ting.
But these solutions will likely take their long, bureaucratic time. And in the meantime, San Francisco homeowners — many of whom say that they were lied to, tricked, or defrauded by the lenders or beneficiaries of their mortgage loans — will continue to be kicked out of their homes with no legal oversight.
People have been claiming these injustices for years. Now, the report has proven that the vast majority of them are probably right.
“Until now, public information in California regarding improper foreclosure practices has been largely anecdotal. This report is important because it is the first to provide a rigorous, quantifiable analysis of the nature and frequency of foreclosure irregularities in California,” said Lou Pizante of Aequitas, a mortgage investigation firm that partnered with the Assessor-Recorder’s office to produce the report, in a press release.
The report focuses on six areas: assignments, notice of default, substitution of trustee, notice of trustee sale, suspicious activities indicative of potential fraud, and conflicts relating to MERS (short for Mortgage Electronic Registration Systems, Inc.).
In 99 percent of loans, the report identifies “one of more irregularities.” In 84 percent, there were “what appear to be one or more clear violations of the law.”
These violations include forging signatures, failing to file proper paperwork, failing to notify borrowers of things that they are legally required to know such as changes in the owners of their mortgages and notices that they have been put on track for foreclosure. And lots of felony fraud.
Yet Ting told us it will be difficult to use these findings to hold banks and other lenders accountable, at least any time soon.
The report is likely the beginning of a lengthy process that will, at best, involve investigations from several city and state departments.
Matt Dorsey, press secretary for the city attorney’s office, confirmed that “we're working with our client department the Assessor-Recorder,” but couldn’t say much else.
District Attorney George Gascon released a statement addressing the report, which says that “Mortgage-related fraud is a top priority in my office will prosecute those who pray on vulnerable homeowners. Many people have lost their homes due to foreclosures, tearing apart families and communities.”
But according to Assistant District Attorney Omid Talai, the DA’s office cannot begin looking into the cases until it receives documents from the Assessor-Recorder detailing the allegations in the report.
Talai emphasized that “our door remains open, and we would always welcome anyone with any kind of information”; homeowners with documents that they believe contain proof of invalid foreclosure proceedings can go to the DA themselves.
But will the release of the report help these homeowners?
When asked if people who believe they were a victim of these “irregularities” and “felony crimes” could use the report to challenge their lenders, Ting replied, “they could potentially.”
But, “the alternate question would be asked, which is: were they actually making payments on their homes? If they weren’t, they would have a very hard time challenging their foreclosure.”
Yet, anecdotally, lenders often tell consumers that they need to stop making loan payments in order to qualify for loan modification. They then get put on the fast track for foreclosure. Ting said his office heard these anecdotes too.
“Unfortunately, oftentimes when that happens, it’s done verbally. We also heard that. But it becomes almost impossible to prove,” Ting told me.
So banks can lie to consumers, thus potentially immunizing themselves from prosecution based on crimes committed against consumers. Then to top it all off, when folks get evicted and become homeless, they can be ticketed or jailed for sitting on the sidewalk. Thanks, justice system.
Hopefully, this report can act as an important step in the right direction.
“I’m proud of the fact that this is the first report of its kind, in the state, really identifying these issues on a systematic basis,” said Ting.
At least now the thousands of San Francisco residents that have lost their homes can point to evidence proving that this is a more complicated problem than people borrowing money that they can’t afford to pay back.
As the report states, “Reckless borrowing notwithstanding, much publicly available evidence suggests that there are indeed many legitimate victims of abusive lending and service practices.”
These people didn’t need the report to tell them that they were “legitimate victims.” But let's hope that, with its help, they can see some justice.