Thursday, 23 February 2012 21:43

Foreclosure abuse rampant across U.S., experts say - WTAQ News Talk 97.5FM and 1360AM

Written by  Michelle Glass
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By Tim Reid

LOS ANGELES (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.

The audit of almost 400 foreclosures in San Francisco found that 84 percent of them appeared to be illegal, according to the study released by the California city on Wednesday.

"The audit in San Francisco is the most detailed and comprehensive that has been done - but it's likely those numbers are comparable nationally," Diane Thompson, an attorney at the National Consumer Law Center, told Reuters.

Across the country from California, Jeff Thingpen, register of deeds in Guildford County, North Carolina, examined 6,100 mortgage documents last year, from loan notes to foreclosure paperwork.

Of those documents, created between January 2008 and December 2010, 4,500 showed signature irregularities, a telltale sign of the illegal practice of "robosigning" documents.

Robosigning involves the use of bogus documents to force foreclosures without lenders having to scrutinize all the paperwork involved with mortgages. The practice was at the heart of the foreclosure scandal that led to a $25 billion settlement between the U.S. government and five major banks last week.

The banks have never formally admitted any wrongdoing. A Wells Fargo spokesman said, "We have acknowledged we didn't always follow our policies in the foreclosure process. We found some areas where there were deficiencies in our process."

It is expected that the $25 billion settlement will include no admission of wrongdoing by the banks.

Home loans have dropped 33 percent from a 2006 peak that was fueled by generous loans, often to people with dubious credit records. Nearly 11 million Americans now owe more than their homes are worth.

Thingpen said the San Francisco audit, which was commissioned by the city's assessor-recorder, Phil Ting, was not an exceptional case. "Where there's smoke, there's fire, and we're beyond the smoke stage. There's fires in county recording offices across the country."

John O'Brien, the register of deeds for Essex County in northwestern Massachusetts, conducted an audit of loans issued in 2010 and found 75 percent of the assignments to be invalid and a further 9 percent questionable.


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