Title unclear on foreclosed properties
KPFA Weekend News, 02.19.2012
KPFA Weekend News Anchor Anthony Fest: Turning now to Bay Area economic news, this week San Francisco Assessor Recorder Phil Ting published his outside agency review of recent foreclosures in San Francisco. This said that 85% of the foreclosures now in process have seriously flawed documentation. The report has been widely circulated and reported in the New York Times and other media because it suggests that as many as 85% of the foreclosures in San Francisco, may be illegal as documented. Ting told KPFA News, on Friday, he did not think the City could do anything to reverse foreclosures already completed, even if the documents were not prepared in accordance with the law. However, other cases have emerged that suggest that massive mortgage securitization may mean that many foreclosures already completed may be legally challenged. KPFA's Ann Garrison spoke to Ellen Brown, Director of the Public Banking Institute, and author of Web of Debt.
KPFA/Ann Garrison: Ellen Brown, can you explain what the uncertainty about title is likely to mean to people who have been involved in these mortgages in one way or another?
Ellen Brown: Well, all of these mortgages can be challenged, or 85% of them, as Mr. Ting pointed out, and the reason is that 80% of the mortgages have been securitized, which means they've been sold off to investors and all this is done in such a way that the assignments are necessarily invalid because they cannot assign the properties back to the trust. It's very complicated, but anyway it's part and parcel of the whole securitization process. And, if you were to buy a property in foreclosure, or a bank owned property, you may not have clear title. And now, even the title insurance people won't give insurance for these properties because they recognize that there's a problem. It's because more and more homeowners are challenging the fact that they were improperly foreclosed on, or that the foreclosing party did not have standing to foreclose.
KPFA: Are you actually saying that title insurance companies are already refusing to insure title on properties that have been sold after foreclosure?
Ellen Brown: Right, I read that in Neil Garfield's column, and that's why some banks are now putting in there, when you go to get a loan, you have to sign that if there's defects in title, you're going to hold them harmless, that it's not going to be their responsibility. And that's the reason, because they can't get title insurance on it.
KPFA: And, what do you think this might do to the foreclosure market, the market for foreclosed properties?
Ellen Brown: Well the whole market is getting. . . it seems to me it's getting worse and worse. There's a huge overhang of properties, probably more than they're telling us about. And everybody's just afraid to do anything because they don't know what they're getting. I mean, if you read about short sales . . . I actually thought about a property myself and I said no, uh-huh, I just don't want to get into that right now. It's too insecure.
KPFA: Ellen Brown, thank you for speaking to KPFA.
Ellen Brown: OK, thank you, Ann.
KPFA Weekend News Anchor Anthony Fest: And that's KPFA's Ann Garrison reporting. She spoke to Ellen Brown of the Public Banking Institute.
San Francisco City and County Tax Assessor Phil Ting's press conference on his audit of foreclosure documentation in the City and County of San Francisco: