A report commissioned by the San Francisco county assessor-recorder uncovered widespread irregularities and legal violations in foreclosures that took place from 2009 to 2011. The report included audits of 382 foreclosures in the county. Of the foreclosures that were reviewed, 99% contained irregularities and 84% contained what the report called “clear violations of law.” The irregularities and violations included the following:
- In 8% of the audited foreclosures, mortgage servicers failed to deliver to borrowers a notice of default at the start of the foreclosure process, as required by law.
- In 85% of the foreclosures, documents replacing a trustee with a new trustee weren’t properly executed.
- In 45% of the foreclosures, properties were sold at auction to entities falsely claiming to be beneficiaries of the deeds of trust.
- In 6% of the foreclosures, the same deed of trust was assigned to two or more different parties.
California is one of the states that have been hardest hit by the foreclosure crisis. It is also one of the states that allow foreclosures to proceed outside of court without the supervision of a judge. The San Francisco audit is one of the first of its kind and is an indicator of how pervasive and widespread foreclosure irregularities may be in the rest of the U.S.
A copy of the report, “Foreclosure in California: A Crisis of Compliance,” can be found here.