Archive for February 17th, 2012

February 17, 2012

The Daily Scoop: Foreclosure abuse rampant across U.S., experts say

(Reuters) – A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country.

  • An audit of ~400 foreclosures in San Francisco found 84 percent of them appeared to be illegal
  • 4,500 of 6,100 mortgage documents examined from Guildford County, North Carolina, last year created between January 2008 and December 2010 showed signature irregularities indicating illegal practice of “robosigning”
  • An audit of loans issued in 2010 conducted in Essex County, Massachusetts, found 75% of the assignments were invalid & a further 9% questionable.
  • Due to loan repackaging it became unclear as to whether those performing foreclosures actually owned the properties being foreclosed on.
  • Essex County audit could only find the current owners of the mortgages studied in 287 out of 473 cases.
  • In the San Francisco study, of the foreclosure sales studied between January 2009 & November 2011, 45 & were sold to entities improperly claiming loan ownership.

“It is not impossible that there are homeowners who are alleged to have defaulted on loans to which they never fully agreed to and, further, are being foreclosed upon by lenders that might not even own such loans,” the report stated.”

  •  One factor for this high rate of illegal foreclosures may be due to a lack of judicial oversight. California is a “non-judicial” foreclosure states
  • In judicial foreclosure states such as New York, some judges have been taking banks to task for submitting faulty foreclosure paperwork.
  • Yet, according to Yale Law School housing expert foreclosure fraud had been as rampant in judicial states as non-judicial ones.

“This number around 80 percent is not a number we have not seen before,” professor Brescia said, referring to both the issuing of faulty loans during the housing bubble and the foreclosure crisis that followed. “There have been a very high level of irregularities across the country.”

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