Yesterday, the San Francisco Assessor-Recorder, Phil Ting, released the results of a cursory review of foreclosure documents, finding widespread irregularities in the vast majority of them. The documents included foreclosures from 2011, after the point at which the banks allegedly “fixed” their foreclosure document problems.
Assessor-Recorder Phil Ting in partnership with mortgage investigation firm, Aequitas, announce the findings from an audit of 382 San Francisco homes that went through foreclosure during 2009, 2010, or 2011. The audit shows that 84% of sampled foreclosures contain at least one clear violation of California’s foreclosure laws. The results provide quantifiable support for greater mortgage industry oversight and legislative change.
The audit began last fall after irregularities and compromised documents were discovered as homeowners facing foreclosure came to the Assessor-Recorder’s office looking for property records in order to modify their loans or refinance. A county recorder’s office is responsible for keeping the official public records of property ownership and state law dictates how the mortgage industry must file those records.
“When it became clear that property records were severely undermined, a red flag was raised,” says Assessor-Recorder Phil Ting. “Those records are supposed to be filed with this office and many were simply missing or had serious inconsistencies. 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?”
It’s incredible to me how the smallest players could so quickly uncover evidence of foreclosure fraud, and the large institutional regulators choose not to even try. Registers of deeds and county recorders like Ting, Jeff Thigpen and John O’Brien have done more investigative work than most federal agencies. Abigail Field, a freelance reporter working for Fortune, did more by going to the local courthouse and finding that Countrywide did not properly engage in the securitization process of sending notes to trusts than practically any Attorney General. As Adam Levitin says, this shows that the only barrier to a real investigation of the mortgage industry is will.
The San Francisco City Assessor’s audit also serves as a benchmark for evaluating the Federal-State servicing settlement. The San Francisco City Assessor managed to accomplish in a few months what the Federal government and state Attorneys General weren’t able to do in nearly a year and a half with far greater resources at their disposal: perform a credible investigation of foreclosure documentation with serious implications about the securitization process in general. That’s a lot of egg on the face of Shaun Donovan, Eric Holder, Tom Miller, et al. The SF City Assessor report shows that it really wasn’t so hard for a motivated party to undertake a serious investigation. And that raises the question of why the largest consumer fraud settlement in history proceeded with virtually no investigation.
The lack of investigation was the compelling criticism that led the NY and DE AGs to stay out of the settlement for quite a while. I’ve never heard an answer as to why no serious investigation. As the SF City Assessor’s audit shows, the documentation is all a matter of public record. It’s not that hard to do, especially if you have the resources of the federal government. So the resources were there. The capability was there. So why no investigation? The answer has to lie with lack of motivation. Were the Feds and AGs scared of what they would find if they delved too deeply into the issue?
As Levitin points out, Ting uncovered more serious irregularities than just robo-signing. He found that the public assignments differed from what was represented to investors in SEC filings, a clear case of securities fraud. Ting also found that the foreclosure data didn’t match MERS records on the loans, which breaks the chain of title and really drives a stake through the heart of the public land recording system in America, something that separates modern civilization from its antecedents, according to economist Hernando de Soto. Ting also found that 59% of the assignments he looked at were filed after the Notice of Default. In other words, the documents were essentially generated after the decision to foreclose. 59% of all documents were back-dated, too.
Gretchen Morgenson has a good story in the New York Times about all of this, as does Yves Smith. In general terms, there are parts of the mortgage business, unseemly parts, that most state and federal regulators don’t want to deal with. They don’t want to regulate in those areas because it would show the banks to be operating a massive criminal enterprise. And nobody wants to deal with the Gordian knot of broken chain of title. They just don’t want to go there. Levitin chalks it up to a social problem, with the political leadership of the country too close to the financial leadership, “and unwilling to call out criminal acts by their peers.” There’s also an economic worldview element, as people like Tim Geithner cannot envision waking up to a world without Bank of America. So rampant criminality, and the destruction of the largest market in the world, gets swept under the rug.
Hoping at this late date for some meaningful action on these issues seems like a pipe dream, but this data would be useful to the RMBS working group investigation, and I hope Eric Schneiderman read his New York Times this morning.




34 Comments

Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
NPR still referring as of this morning to `sloppy paperwork’. Grrrr.
The motto for the RMBS Working Group will be: Look forward, not back – except for the dating.
Good work, David. Thanks for keeping us informed on a timely basis.
You are so right about the AG’s not having the will to investigate. They should all be ashamed of themselves.
The San Francisco Chronicle had an article about this this morning:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/02/16/MN691N857R.DTL
It still apllies to this day…….”Follow the money”.
Nothing “incredible” here, David. Nobody bothered to bribe or pressure the smaller players. That’s all.
In related news, a corporate hand was slapped:
http://www.latimes.com/business/la-fi-citi-settlement-20120216,0,2857186.story
So the Republicans will be replaying endlessly in the MSM Obama’s “They did nothing illegal” quote, right? Probably not if we are following the money.
The NYT and Naked Capitalism pieces hammer home the question of “why no investigation?” but what everyone should be hammering on is the connection betw Holder and Breuer and the law firm that OK’d the creation and implementation of MERS. WTF is wrong with everybody conspiring to not draw attention to that as the most likely explanation for the lack of federal investigation?
The Establishment does not want to deal with the widespread damage to chain of title and contract law caused by the real estate and banking interests. Understandable. It would be much lesss disruptive to simply seize ALL assets of anybody who ever made money from corrupt practices, and pass legislation mandating that whoever is currently inpossession has clear fee simple title going forward.
The evidence is so easy to find, and in some locations, the county land records are online. I did my own little investigation in 2010 just out of curiosity and found some of the same things the SF folks found: MERS assignments (sometimes saying they were effective years before) signed and filed within a few days before or after the Notice of Pending Suit, and the assignment was signed (as a MERS VP) by an employee of the same law firm that was representing the bank/servicer. It took less than 30 minutes to find the first one.
DIY foreclosure fraud investigation:
1. Search the online land records for a selected county for any document with MERS as a party. Copy and paste the results in an Excel spreadsheet…the results should include all the data for that document including the legal description.
2. Do a second search, this time searching under document type for ‘Notice’. Copy these results and paste them into a spreadsheet.
3. Compare the legal descriptions on the two spreadsheets and make note of the legal description and highlight the info for those that match. One or both documents should have the name of the owner of the property.
4. For each of those matched (where there is both a MERS assignment and a Notice of Pending Suit–or whatever the Notice is called in that county), you have found a property where foreclosure was instigated on a property where MERS assignment was involved. Select ones you want to investigate further: since there are likely to be many, go for the low hanging fruit first and choose the ones where there is a MERS assignment dated close to the Notice date.
5. For each of those you have selected, search under the owner’s name or property description, and set up a separate spreadsheet for each property. Actually, search once under the owners name and copy that list onto a spreadsheet and then search again under the legal description just to make sure you have all the documents. (There are sometimes typos in the legal description in the database and sometimes the database doesn’t have all the details, so if you don’t get results, search under a part of the legal description: search under the name of the addition (if it is platted land) or if it is not platted, search under the township and range and section and quarter sections (the NW and SW parts of the description) and peruse the list until you find the documents for the property that matches the assignment and notice. The goal is to get a list all the legal documents filed on this piece of property. Copy all the info on each document for that property into the spreadsheet for that property.
5. Look at the dates of each of the documents for that property. Look at the dates when assignments were filed. Look to see if MERS is listed on the mortgage….they are often listed along with the name of the bank, as nominee. Look to see if any assignments were filed between the date the mortgage was filed and the Notice of pending foreclosure. Look to see if an assignment (or a corrected assignment) was filed within a couple of months before the Notice. Look for those filed AFTER the Notice. Look for a Sheriff’s Deed; if you find one then the owner of this property lost their house..it was sold by the county sheriff on behalf of the supposed owner of the note and mortgage. The data on the sheriff’s deed also tells you who bought it….whether the bank bought it back or it was sold to someone who may now have title issues.
In the county records I looked at, this is all I could get for free. To download the actual documents, it cost a dollar a page, so I chose carefully. The interesting thing I found was that when I downloaded the first assignment, I found that the law firm handling the foreclosure had physically stamped their ‘after filing return to’ instructions with the name of the law firm on the document, so I knew who was handling it. I googled for all information on that attorney or the firm and then went to the website of the law firm and looked at the attorney’s names and low and behold one of the attorneys had the same last name as the MERS VP. (It wasn’t the attorney handling the foreclosure, but was with the same firm.)
I looked at their client list, which is often on their website, and there were all the usual players in this scandal: LPS, the big banks, etc. This was a firm that apparently specialized in foreclosure suits for the big boys.
I then downloaded documents on a couple other properties and found that most of them with this pattern were filed by the same firm. I thought this was maybe a coincidence, or they had a local office in this rural county, so I did the same thing in another county and selected an assignment that fit the same pattern–and it was filed by the same firm.
Be warned: this is a rage-inducing process because you’re looking at the process and the documents that cost someone their home, or (if there’s no sheriff’s deed) at least put them through the stress and financial difficulty of fighting the foreclosure.
I’m not saying every one of those was fraud…obviously that would require a much more detailed examination of the documents by an attorney (I’m not one), but it gives you an idea of how easy it would be to get the list of properties and documents to investigate for fraud. It doesn’t take the services of dozens of attorneys to do this first step…anyone with a computer and access to the computerized database can do this. People paid $10 an hour could do this part and print off and organize the relevant documents and give them to the attorneys or investigators for the AGs.
Please, Fractal and realitychecker and any other attorneys, let me know if I’m wrong on any of this. And I just wrote all this from memory of how I did my little DIY project a year and a half ago…I hope I remembered correctly.
Good work, crowinghen! My hat’s off ta ya!
I read this article in today’s Sacramento Bee. I fully expect that over the next few days, the SacBee will get numerous letters to the editor saying how completely “wrong” this article is, and how all the foreclosure issues are all & only the “fault” of shiftless low-lifes who borrowed money that they “shouldn’t have.” And that it’s all about
uppity minorities who got uppity and wanted to live in my neighborhoodlazy scum who didn’t manage their money correctly.I’m sure that, if the corp-owned media actually deigns to notice this piece of reality, this is the meme that they pump out to their propogandized “audience.”
Its becoming increasingly clear that the only governmental entities willing to serve the people’s interests are found at the local level. The rule of law is only applicable if you’re not too big to fail, if you lack personal connections or access to power, or if you can’t write large checks to those who are.
That meme is everywhere, who writes it and disseminates it?
Nice to have you around, ch. I’ll defer to experts like fractal, I have no real estate expertise. But what keeps running thru my mind is “Ignorance of the Law is No Excuse.” So routinely applied to the little people that lawyers actually abbreviate it–ILNE. When it does not get applied to those who actually had real reason to NOT be ignorant of the law, the whole system becomes illegitimate, IMO.
Thanks. I have always been fascinated with land records, going back to the mid-1970′s when between my sophomore and junior years of college (two year gap because I had to earn enough money to go back to school), I did a stint as the abstract librarian for an S&L. It was a pretty boring job and I spent most of my time reading abstracts….you could read the stories of people’s lives in the documents in the abstracts.
A few years later, when I was in banking, a lender had released some commercial real estate mortgages without getting payoffs on the loans (sort of the reverse of what happened the last few years) and management asked me to take time away from my regular field auditing job to lock down all the commercial real estate collateral files and do a file review on each one and make sure there weren’t any other problems, and then write procedures for the clerical personnel and their supervisor to make sure no mortgages were released without payment. (Before that, the clerks and supervisor did whatever the lenders told them to do, because the lenders were officers and the supervisor reported to the same person the lenders did.) Then management asked me to take over as manager of loan operations (loan processing which is the financial side, collateral, and doc prep)and make sure step by step procedures were in place for every employee in real estate, commercial and retail loan operations. I was 30 at the time and knew nothing about those areas, so I set about learning. It didn’t include residential mortgage loans, but the requirements for handling notes and mortgages and recording land transactions are pretty much the same….these are the basics that anyone dealing with loans would know. (I know little about the specifics of the consumer regulations that apply to residential mortgages that are in place to make sure the lender discloses all relevant terms and conditions to the borrower. But in the current system, the lenders ignored not just the basic laws for recording land transactions that apply to all mortgages, but the consumer laws as well.)
That is probably why I became obsessed with this scandal, fraud, and travesty of foreclosure fraud and the settlement, which I also consider a fraud. I know how these things are supposed to work, and there’s just no way this all came about because of ‘errors’. It was systemic, it was fraud, and it was abusive to borrowers, and there has been no accountability, no senior people in jail, no restitution to the people who were abused by the industry.
Exactly! If they were that ignorant, they shouldn’t have been in their positions, and someone up the line chose to put each of them in the position they were in. Once in the job, they were only ignorant because they chose to be. No excuse for that.
Naked Capitalism has an article about how Paul Jackson of Housing Wire is smearing the authors of reports on housing fraud. i think you would find this person to be nothing more than a paid pr person( its too early for cursing) who will say anything on behalf of his paycheck
There is a pattern I have observed that seems to be deliberately aimed at getting the money of those inclined to avoid risk. The LBO craze of the 1980′s showed corporate bondholders that they could be raped with impunity. The 1990s stock bubble, created by the Fed holding interest rates at 0%, forced those who only trusted bank accounts, money markets, and CDs into the stock market, where the smart money could take all the money when the bubble was ripe in 2000. The next-most conservative money was those who only trusted investing in their homes, and the retirement savers. The housing bubble that was deliberately created thru all the shenanigans we now know about targeted BOTH of those groups simultaneously, the retirement savers via securitizing bad mortgages and selling them as safe investments at a time when interest rates were still being held near zero. Waves of activity where all the actors were pushing in one direction, and all profited hugely except the naive, would-be conservative, risk-averse money. The pattern is clear, and IMO has to have been deliberate. The penalty should be death, but it won’t even be forfeiture of illicit profits. Very disheartening. Now the next (and last) cache of risk-averse money is the Social Security money (because they can never get the under-the-mattress money), and after they get that, the country will be sucked completely dry of capital and the corporations can move on to the developing markets where the fast future growth will be, with nary a backward glance.
Thank you! I was beginning to think I was the only one who also had that as a hot button issue. When the Fed started lowering their rates, and somewhere along the line removed the stigma for banks of borrowing from the Fed (it used to be that a bank did that for very short periods and it was a sign that they were having problems), the banks no longer needed to offer depositors reasonable savings and CD rates, and the risk averse were forced to lose money to inflation or at least earn nothing, or else go into the market, where they could lose it all. My parents, working class people, lived simply and saved as much as they could. We used to joke that for every 50 cents Dad made, Mom saved a dollar. By the time Dad retired, they had a nice nest egg, and earned money every year from their CDs, using some of the interest to supplement their social security if they needed it. Never touched the principal. They lived 30 years after he retired, and didn’t touch principal until they had to go into a nursing home the last couple of years….that was their goal, to make sure they had enough to never be a burden on their kids.
Now, if we haven’t already had to wipe out whatever was left (after market crashes) of our rollover IRAs after our jobs were eliminated, if there’s anything left for retirement, we will be using principal, with nothing left for our final years and nothing to leave our children. I think that isn’t an accident. The rich leave enough money to their children to make each generation wealthier, and maybe there was a fear that the working and middle class might start doing that for their children if they were preserving the principal of their savings, using only the interest from CDs, leaving to their children a small cushion for hard times or the seeds of their retirement nest egg. The PTB can’t have that. So Social Security is attacked, and more retirees need it to live on because their savings have been wiped out by the manipulators of the markets.
Every time I see that CD rates are near or below 1%…and that is advertised as if it was a good deal…I get angry all over again.
IANAL, but it looks to me like there is a Lawyer’s-License-To-Print-Money here: I’m sure that in at least some states, there are penalties or loss of interest provisions tied to all this missing paperwork.
With an 80% bad paperwork rate (remember, although this is a sample of foreclosures, the same paperwork problems are in GOOD loans with able borrowers), there’s probably a huge potential for those owners to get their houses equity FREE by simply establishing to the state that the current loan holder actually has no title, and if the loan holder of record is defunct or clearly has no interest, well, FREE HOUSE!
I’m sure some big damages firms out there can come up with a standard “give us 5% of your house if we release the loans” deal and make bazillions off of this… HEY LEGAL EAGLES! FREE MONEY! :)
Who writes & disseminates the rightwing memes? Well the corp-owned media, for one, plus rightwing “think” tanks, heavily funded by 1%ers like the Kochs, for another.
Sometime before Keith Olbermann was kicked off of MSNBC, he actually had a discussion about this on his Countdown program. Olbermann highlighted how the meme started, say, at Fox, and then was bellowed out by Rush Limbaugh, and then made the predictable rounds of everywhere else, *including* being repeated – allegedly in order to refute it – on so-called “lefty outlets,” like NPR, Air America & MSNBC (which, at one time, were sort of more or less “lefty,” albeit now, not so much).
The 1% pays shills to hack out this junk, and then I see John & Joan Q. Citizen reliably & dutifully barfing it back in Letters to the Editor of my nooz paper.
The truly amazing part is that nobody with a significant public voice has ever spoken about this pattern, and its implications, effects and consequences. Don’t disturb the cattle on their way to the slaughterhouse.
That, and the fact that some title companies were also complicit in the creation of MERS. For the life of me, I can’t figure out how any title company could go along with the whole scheme or how they could possibly offer title insurance on anything anymore since, I would guess, the majority of all real estate titles now are operating under a cloud. Sooner or later, that cloud is likely to burst and the toxic flood waters will likely poison the land from coast to coast.
I also can’t understand what possible good it does to sweep this stuff under the rug, especially since everyone already knows about the kind and amount of dirt that’s under there. Seems everyone would have been better off if this new administration had just demanded a cleaning crew come in and clean the house before they started moving their stuff in. By now it’s all been so compromised and corrupted that they’ll probably have to tear parts down and rebuild. Shame on them all, Demwits and Rethugs alike!
Let us not forget that Obama was supported in the election by the very entities he has refused to hold accountable. In my world, two plus two equals four. Call me crazy . . .
On edit…this was meant as a response to realitychecker @22:
That’s exactly how I feel….I really don’t understand why people are not screaming to high heaven about the low interest rates for savings and CDs and how this came to be, and who benefits. (I scream every time I hear that the Fed is keeping rates low to encourage lending to businesses so they can create jobs….this is total bullshit and an outrage. It means the banks can get more free gambling money….they are gambling on the fancy derivatives and other things they dream up and tell everyone it’s too complicated for anyone else but them to understand.)
The banks still charge 15% to whatever higher rate they can (whatever happened to usury laws?) on credit cards, and pay zilch on savings. I guess no one notices because it’s not like we have much savings left. But it is a huge issue.
There is something very very wrong with this picture.
And I blame a lot of it on the MSM. As you pointed out, they have been totally complicit in all this. I laughed when I was watching CBS evening news yesterday and the anchor was doing a story on the current NBA sensation named Lin who couldn’t get a college scholarship and then was turned down by several NBA teams. The anchor said something about college baseball programs and the NBA….that was such an obvious mistake (I’m not a big sports fan and even I know that he should have said basketball, not baseball) but he apparently didn’t even notice after he’d said it.
I’m guessing a lot of people hearing that recognized the baseball/basketball mistake. But the number of people who notice their misstatements (aka lies) as they read the propaganda about the foreclosure fraud and the settlement are miniscule by comparison. Most people think the MSM’s reporting about financial issues and policies is accurate and don’t question it.
In your dreams buffy. Judges are not all gung ho to give free houses, though if they did so for 6 months, you would suddenly see banks begging underwater mortgagors to accept meaningful modifications
All the media is owned by 5 major corporations, so the corp-approved message is all they put out. It is AMAZING how people resist knowing that truth.
Yep. And I fear we will have a hard time taking back democracy as long as that’s the case. Banning ownership of media outlets by corporate conglomerates that have companies in other industries would make my top 5 changes list…along with breaking up the banks, reinstating Glass Steagall, and repealing the AUMF and Patriot Act. Oh, wait, I left out overturning Citizen’s United….I guess that makes it a top 6 list.
When I found out an attorney from the legal firm my bank used had signed (plus they used their IL notary on it) the assignment a few days before I was served with the foreclosure action, I asked my attorney about it. His response was that it was permissible for said attorney to do that so long as the bank had given them written authorization to sign on their behalf.
Call me crazy, but my understanding of MERS was that only bank “officers” could sign for things, not lowly attorneys – especially since there actually is no position title listed for them!
In my case it wouldn’t have mattered anyway because the judge either is ignorant regarding fraudulent documents and how you spot them, or he is complicit. Considering he takes sizeable campaign contributions from those legal firms through his election/re-election “committee”, he has not broken any laws or violated any judicial ethics. Pay-to-play is definitely alive and well here in the Land of Corruption that is otherwise known as Illinois.
The kicker for me was when I found out that the judge researched me before my last court date. I don’t believe he does that with other defendants, so I can only assume that his decision was in retaliation for me speaking out publicly about my foreclosure, and about him and those donations and document issues.
I am so sorry that happened to you. It is outrageous…and kind of scary that the judge searched for info on you before the hearing. That doesn’t sound like an impartial judge making a decision based on the facts at hand.
I don’t know all the ins and outs about the assignments, but I thought some judges had a problem when the assignments happened in close proximity to the foreclosure action….certainly if it happened after they started the foreclosure action. It seems to me that when the notes and mortgages change hands, the banks should have prepared and signed the assignments at that point. (Even if it wasn’t filed because they used MERS.) MERS was said to be a registry, but the role they have assumed (and delegated to hundreds or thousands of people) is far beyond that. In my little DIY investigation, I saw assignments that were signed a few days before or after the Notice was filed but contained language saying they were effective several years before–right after the mortgage originated…that made me think even they recognized it should have been done then, so they tried the ‘effective as of______’ (backdating) since there wasn’t an assignment signed back then.
I don’t see how an assignment signed by someone at the same law firm passes the smell test…it certainly seems beyond the role of the foreclosing law firm. The fact that the public can’t access the MERS database means no one knows if even MERS (likely flawed) records show that the bank foreclosing actually owns the note and mortgage. MERS has so screwed up the land records….I don’t see how can anyone ever know if there’s a mortgage out there on the property if they can’t find out from the county land records.
If Fractal is around, maybe he can give us some details on the issues related to the date of the assignment and why they sometimes try to have an effective date several years prior to the date is is signed. I would like to understand that issue better myself.
Cynthia Kouril has a post up on this, too…focusing on the invalid transfers and property being sold at sheriff’s sales that may not be valid sales. If you haven’t seen it it’s here:
http://my.firedoglake.com/cindykouril/2012/02/16/85-of-mortgage-transfers-were-no-good/
I didn’t realize the report went into such details…I’m going to go read it. Looks like it may have some of the info on the timing of assignments.
Daniel Fisher, the industry lobbyist at Forbes, is actively trying to discredit the company Ting used to conduct the audit…
Mortgage-Audit Firm — Surprise! — Finds Lots of Errors in Foreclosures
http://www.forbes.com/sites/danielfisher/2012/02/16/mortgage-audit-firm-surprise-finds-lots-of-errors-in-foreclosures/
“this data would be useful to the RMBS working group investigation, and I hope Eric Schneiderman read his New York Times this morning.”
Yes, that sure is your PIPE DREAM, David Dayen. Eric Schneiderman is a corrupt piece of left over rotten baloney. He is the one who deceived other AGs doggie style and, pretty much, single handedly gave this settlement amnesty to Obama and his corrupt banksters. If there AGs have any sense of honesty and dignity, they should refuse this settlement and, instead, proceed with investigation and prosecution.
Actually, the article is much ado about nothing, it’s a bunch of legal conclusions tied up in a pretty package. Any knowledgeable attorney will tell you it’s basically useless; and the noise you hear in the background are the banks laughing.
First, the company that performed the “audit” also performs these bogus “forensic loan audits” aka software TILA/RESPA audits that California’s attorney general as well as many others have stated are basically scams. Mortgage Fraud Examiners were the first one to identify them as scams and the Attorneys General picked up on it shortly thereafter. See, http://www.prurgent.com/2011-04-21/pressrelease165977.htm
Why in one breath is California commenting on bogus audits and then using them?
Second, “securitization audits,” except maybe to just STALL a foreclosure are basically useless as well. See, http://www.nakedcapitalism.com/2011/05/new-homeowner-scam-mortgage-securitization-audits.html
Matter of fact, either today or tomorrow Mortgage Fraud Examiners will publish it’s latest press release: “Beware of the Latest Foreclosure Rescue Scam–Securitization Audits” explaining why they are a waste of money.