Abuse, Errors and Inconsistencies Found In Foreclosures

Last Updated: 17, February 2012

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A Californian audit has uncovered gross levels abuse in foreclosures, with almost 84 percent of all foreclosures illegal and two-thirds of all foreclosures with at least four violations or irregularities.

The study, commissioned by Phil Ting, a San Francisco accessor-recorder, studied 400 foreclosure sales in the city from January 2009 to November 2011 and uncovered rampant abuse similar to lender fraud and faulty documentation found in other parts of the United States.

The New York Times wrote:

[quote] The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership. [/quote]

A staggering 99 percent of foreclosures violated one or more documentation irregularities, such as incomplete filings, to premature foreclosures and improper claims.

The report done by Aequitas, a mortgage regulatory compliance firm, comes days after a $25 billion settlement over foreclosures improprieties between the United States government and 49 state attorney generals and five major banks.

While the banks have never formally admitted wrongdoing, the settlement requires the banks to reduce outstanding mortgage amounts and to provide $1.5 billion in reparations for borrowers who were unlawfully removed from their homes.

Ting said:

[quote] Clearly, we need to set up a process where lenders are following every part of the law. It is very apparent that the system is broken from many different vantage points. [/quote]

The report contradicts the assertions of many banks that foreclosure improprieties did little harm because the borrowers were behind on their mortgages and should have been evicted anyway.

The Aequitas ‘A Crisis of Compliance’ report noted:

[quote] We can deduce from the public evidence that there are indeed legitimate victims in the mortgage crisis. Whether these homeowners are systematically being deprived of legal safeguards and due process rights is an important question. [/quote]

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