LAKEPORT >> Nearly an hour and a half of Tuesday’s Lake County Board of Supervisors meeting was dedicated to the potential of a land records audit.
After hearing from multiple residents regarding alleged illegal foreclosures, the board held the discussion with the purpose of determining whether an audit would be financially feasible and to what could be done with any information garnered from it and to what extent the county can pursue litigation or regulation.
The foreclosures in question were not recorded by the county.
Lake County Assessor-Recorder Richard Ford cited a report from the California Department of Real Estate that he said clarified that the county recorder is not responsible for verifying the validity, authenticity or legitimacy of the document that is recorded.
“In other words, the recorder is not responsible for detecting a fraudulent document and … does not look beyond the document itself,” Ford continued. “If the document meets the essential recording requirements and proper fees are submitted, the county recorder is obligated to and will record the document.”
As for the cost, based on the precedent of an audit performed in San Francisco, it would run approximately $663,000 to audit all of the county’s nearly 4,500 foreclosed properties.
However, an audit of a sample 16 percent, which would look at a little more than 700 foreclosed properties, would costs a little more than $103,000. Many reputable audit firms don’t perform land records audits, Ford explained. Meaning the cost “could be substantially higher.”
Furthermore, since the sample would be taken at random, performing a sample audit would not guarantee finding any foreclosure fraud.
“It’s an audit, not an investigation,” Ford said.
Kelseyville resident Larry Anderson, who has addressed the board during public comment at nearly every recent meeting said California being a nonjudicial state is a key issue.
“It means no courts are watching the hen house,” Anderson said. “Banking cartels have all the money in the world and small local attorneys don’t want to take on the banks.”
Liza Chavez also addressed the board.
According to Chavez, her house in Clearlake was foreclosed on in 2009 despite being current on her mortgage payments.
Lake County District Attorney (DA) Don Anderson explained to what extent the DA’s Office can pursue prosecution.
“The law is uncertain on how we are going to enforce this,” Don Anderson said. “There is no criminal case that I can find that addresses this issue.
Most foreclosure cases that have been filed with the DA’s office regard Mortgage Electronic Registration Systems (MERS) and robo-filing, Anderson explained.
The system is a national database of home mortgages that allows lenders to bypass county recorders to easily transfer mortgage rights. The system is intended to improve efficiency. Before its implementation, lenders registered each mortgage sale with the local government, recorded in public records. MERS cut the recording system, saving time but blurring the trail of ownership each time a loan was sold from one party to another. “For a long time the appellate court cases have said, in essence, the homeowner has absolutely no standing to bring the civil suit,” Anderson said. “The plaintiff is going to be one bank over the other bank, not the homeowner.”
This is because it is assumed that it is known mortgages can be assigned from bank to bank or other lending institutions, he added.
County Counsel Anita Grant said that the California Homeowners Bill of Rights, while giving “considerable protections to homeowners against predatory lending practices,” does not give any cause of action to local government to act on behalf of citizens civilly.
“There is a state law that allows for recording fees to be increased and then would require the DA’s office to create a department of real estate fraud,” Grant explained.
But a substantial amount of cases would be needed to make that option worthwhile, Grant added.
“Ultimately, a solution needs to lie in Sacramento … but it’s a question of who’s door are you knocking on,” Grant said. “If the state doesn’t give you the hammer, then you don’t have one to wield.”
During public comment, Vietnam Veterans of America Northern District Director Dean Gotham told the board that veterans losing their homes has been an ongoing problem for the entirety of his ten years
“There is a tremendous human cost associated with this,” Gotham said. “All that we’re asking is to shine a light on it.”
No action was taken by the board, as the discussion was continued to its May 26 meeting. During that meeting the board will bring a resolution stating their concerns.
“It would send a signal to the state-level people … and that we would like them to look at it,” District 3 Supervisor Jim Steele said.
“I wish there was something we could do that wasn’t just symbolic,” District 5 Supervisor Rob Brown said.
Contact J. W. Burch, IV at 900-2022.
