The mortage crimes

Pub date February 28, 2012

EDITORIAL The mortgage crisis in San Francisco isn’t just devastating to homeowners and to the southeast neighborhoods where foreclosures are most common — it’s clear evidence that lenders and their affiliates are and have been acting illegally. This city ought to be taking the lead on pressing civil and criminal charges against the mortgage outfits.

City Assessor Phil Ting commissioned a report in February that showed that nearly every one of 382 foreclosures actions in the city between January 2009 and October 2011 had at least some irregularities. In more than 80 percent of the cases, the report identified direct violations of law.

It’s a stunning revelation: In nearly 100 percent of the cases studied, the mortgage companies did something wrong. Homeowners were not notified that they were in default. Properties were seized and sold by companies that didn’t have the proper title to them. Documents were backdated or signed by an entity that didn’t have the authority to sign. In some cases, it wasn’t clear who actually owned the mortgage, because the corporation that filed for foreclosure had never property taken title to the loan.

The report comes as Occupy protesters in San Francisco are moving aggressively to target banks that are tossing people out of their homes and at a time when county sheriffs in other parts of the country are refusing to execute foreclosure orders.

There may not be much San Francisco Sheriff Ross Mirkarimi can do — mortgage foreclosures in California can be done with almost no oversight and by the time the sheriff is called in there’s nothing left but an eviction. But the report makes clear that there were both violations of business regulations and crimes, in some cases felony crimes — and the San Francisco city attorney and district attorney should be moving as quickly as possible to take legal action.

Both City Attorney Dennis Herrera and District Attorney George Gascon have asked for more material from Ting’s office, although neither has announced a formal investigation. But every day that this goes on, more people lose their homes and more crimes are committed — and both offices should move as quickly as possible to take action.

There’s nothing in the federal settlement over fraudulent mortgage activity that prevents local officials from taking this sort of action. There’s nothing preventing Herrera from seeking an injunction against further foreclosures or preventing Gascon from indicting the lenders and their executives.

Meanwhile, Ting told us that he’s asking Attorney General Kamala Harris to investigate, because the pattern of violations almost certainly goes beyond San Francisco.

State Sen. Mark DeSaulnier has introduced a bill that would mandate transparency in foreclosures, so at least homeowners would know who to contact to seek a modification. That’s a good start. But holding these sleazy operators accountable would send a message that San Francisco isn’t going to let this sort of behavior continue.