SAN FRANCISCO (AP) — California Attorney General Kamala Harris said Thursday that her office was reviewing a new report that found most residential mortgages in foreclosure in San Francisco are missing documents or signatures or otherwise violate the law.
More than 80 percent of the loans examined at the order of San Francisco Assessor-Recorder Phil Ting contained such errors, according to the report.
"The allegations are deeply troubling and, sadly, no surprise to homeowners and law enforcement officials in California," Harris said.
While many of the errors were technical and related to paperwork, the problem shows the state needs to change its antiquated real estate regulations, Ting said.
"The whole process ... is absolutely, 100 percent broken and not working for any of us at this time," Ting said. "These rules were made for people who walked or rode their horse to the bank."
The review found that signatures of some original owners of loans were missing and that affidavits were not filed showing lenders had contacted borrowers to discuss their options 30 days before a mortgage default notice.
The review was conducted by Newport Beach-based Aequitas Compliance Solutions. The company looked at 382 of the city's 2,405 foreclosure sales between January 2009 and October 2011.
The report said it was possible that homeowners were accused of defaulting on loans that they had never agreed to in the first place, and were being foreclosed by lenders that didn't own the loans.
Harris walked away from the negotiating table in September during talks with banks about a nationwide settlement over foreclosure abuses. She said last week that California's share of the settlement agreement reached with Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. this month could be worth up to $18 billion to the state, one of the hardest hit by the foreclosure crisis.