LAKEPORT >> The Board of Supervisors reached a unanimous consensus to gather deeds and documents from residents alleging mortgage fraud after a hearing this week involving Redondo Beach-based Attorney Allen D. West. The purpose will be to find any deficiencies and forgeries, with the help of county staff and West. The documents will then be presented to the Lake County District Attorney’s Office (DA) for consideration of prosecution.
The board will also request a report from the DA regarding it’s findings. Still, the decision was short of decisive.
“The mere performance of an audit will not accomplish anything if the district attorney does not find anything illegal or does not prosecute,” District 4 Supervisor Anthony Farrington said. “The end game needs to be of substance, it can’t just be a symbolic gesture.”
West was brought into the discussion because of his expertise in cases ownership of property when is in question, either because of liens or levies. Such issues often result from mortgage loans being passed from one financial institute to another.
“I am not here to advocate on behalf of homeowners,” West said. “I’m not here to market or make a sales pitch.”
Although often referred to as an “audit,” West explained that “it is just an examination of the public records.”
The purpose of the analysis would be to determine if any fraud is present in foreclosure cases throughout the county, which multiple residents have alleged since last August. The board then held a discussion to consider the impact of Mortgage Electronic Registration Systems (MERS) on county records
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.
“Wall Street, with the banks, using the vehicle of MERS created something called securitization back in the early 2000s,” West said.
Securitization occurs after a mortgage note has been assigned, sold or transferred between a minimum of three banks or lending institutions. The note is then placed into securitized trust, which is invested and sold.
“They [Wall Street, banks and financial institutions] came up with this process to make billions,” West said. “As you see the notes being assigned, transferred or sold off, each bank is making money.”
Financially feasibility of the examination, use of any information garnered from it and to what extent the county can pursue litigation or regulation were all points of discussion.
According to West, the cost of the audit would be determined by the number of years the board wanted reviewed, with two to three years costing approximately $50,000 to $70,000. All records would from those years would be reviewed.
One potential method of paying the cost of the examination was to increase recording fees at the Assessor-Recorder’s office.
“The audit was represented to us to be free,” Farrington. “I don’t see it being free, I see it still having the tax payers and rate payers paying for it.”
“It’s not coming out of any coffers that the county currently has,” West responded.
During public comment multiple residents came forward to discuss alleged fraud on their mortgage documents.
“How is this not a criminal conspiracy and criminal act?” Rob Somerton asked.
Somerton’s house was auctioned by Bank of America in February, after nearly four years of foreclosures battles.
“My concern as a parent … is the clouding of the thousands of titles in every county and the accuracy and integrity of our records,” Jed Davis said.
“This is for the county’s benefit. From my point of view is not to assist a certain homeowner.” West said.
“We can’t force the DA to prosecute a case,” District 5 Supervisor Rob Brown added.
During it’s May 19 meeting, 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,” 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 MERS and robo-filing, according to Anderson.
“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.
Contact J. W. Burch, IV at 900-2022.
