New Study Shows 85% of Foreclosures Had Issues

Foreclosure CrisisThat’s a pretty startling headline, isn’t it? Yet, that was the conclusion reached by study of 400 foreclosure files commissioned by San Francisco County assessor-recorder Phil Ting. You can read the data in a report authored by the auditors called “Foreclosure in California- A Crisis in Compliance.” It’s only 21 pages long and written in plain language. You should read it, if only for common sense language like this:

Given these well-documented and widespread origination and servicing issues, it is not implausible 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 fact that these homeowners borrowed something, on some terms, from someone should not be enough to rob them of their due process right.

Gretchen Morgenstern at the NYTimes is all over this story. She writes:

In a significant number of cases — 85 percent — documents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.

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