Weapons of Mass Eviction: Faulty Intelligence in Mortgage War Increases “Mistaken Foreclosures”

21 Aug

Weapons of Mass Eviction: Faulty Intelligence in Mortgage War Increases “Mistaken Foreclosures”
08/20/2009 By: Adam Weinstein

Anna Ramirez had a tough day by any standard. First, there was the knock at her door by police. Then the forcible ejection of her husband, daughter and grandchildren from the property, and the scattering of their furniture across the front lawn. The chaining shut of her house’s front door. The humiliating realization of her own instant homelessness.

Then there was the acknowledgment by her mortgage lender that it was all a big mistake.

“This came out of nowhere,” said Ramirez – whose house, ironically, is nestled south of Miami in a onetime Florida boomtown called Homestead. “The bank took the house from right under my feet.”

Authorities say the woman’s lender, Washington Mutual – now part of J.P. Morgan Chase – foreclosed on her house while she was refinancing it, then auctioned it to a new owner. Then, after WaMu realized the mistake and reversed the sale, a Miami-Dade county court clerk failed to notify the home’s new owner – who chucked Ramirez and all her stuff off the property.

“This shouldn’t be happening, you know, because we did the right thing,” she said. “We went step by step.”

Doing the right thing is mattering less and less today. According to the data provider RealtyTrac, one of every 355 houses in the nation received a notice of default or foreclosure in July – 360,149 homes in all, a 7 percent jump since June and a 32 percent jump over the same time last year. Growing defaults mean overworked mortgage lenders, servicers, investors, attorneys and courts are making more mistakes – transposing social security numbers, mixing up names and losing payments. And increasingly, the victims of those mistakes are innocent homeowners who are up to date on their loans.

“This story really calls attention to just how inefficient and over-stressed the systems and people who process foreclosures are,” Rick Sharga, a RealtyTrac senior vice president said of Ramirez’ case. “We hear from people who find their homes listed as foreclosures on our website due only to errors from lenders in processing: entering the wrong address, the wrong loan document, sometimes even the wrong owner.”

Ramirez could have had it worse. Staff Sgt. Gerald Thitchener and his wife Katrina temporarily left their Las Vegas condo for his Air National Guard assignment as a fighter-jet mechanic in Tucson, Arizona. When his work was done, they returned to the home at 2981 Country Manor Lane, unit # 118. They found that Countrywide Financial had foreclosed on it, auctioned it and destroyed their belongings – including Katrina’s wedding dress and a photo of Gerald meeting President George H.W. Bush

during the first Gulf War.

But Countrywide was supposed to foreclose on unit #10.

It turned out a contracted inspector mixed up the units, and Countrywide sent a locksmith and a Realtor to inspect the Thitcheners’ apartment. He decided it had been abandoned and told the landlord to “trash out” their condo.

Warren and Norma Becker of Studio City, California, didn’t let events go that far when they started getting junk mail from attorneys who noted that their “home is involved in a foreclosure processing.” They poked around and discovered that a private publisher of foreclosure lists had mistakenly put out a notice of default in their names.

That publisher, Ronald M. Frumkin of Redloc Information Services, said such mistakes were inevitable in Southern California, where he deals with 20,000 similar notices in a month. “A clerk may look up the wrong deed of trust, the legal description may be copied wrong, the legal description may be matched with the wrong parcel or an error in entering all this information into the computer may occur,” he said.

In Ramirez’ home state of Florida, the foreclosure courts have gotten so glutted up with filings that they’re seeking help from the private sector. A panel set up by the state Supreme Court recommended this week that most foreclosure proceedings be sent to contracted mediators for resolution.

The task force didn’t even bother asking to hire more judges and clerks. “Given Florida’s financial situation, it would be a foolish exercise… in the absence of any realistic expectation that such recommendations could be funded,” the court said.

But the courts may be giving themselves more work in the long run. If private mediators don’t cut down on the false foreclosure rate, more angry homeowners may sue their overly exuberant servicers and lenders.

That’s what the Thitcheners ultimately did. They took Countrywide to court over its treatment of them. Some of Gerald Thitchener’s detractors didn’t like the fact that he wore his Air Force uniform to court appearances; that was grandstanding, they argued.

He replied that he’d had no choice: His last dress suit had been thrown out by creditors in the foreclosure.

The courts awarded him and his wife $2.2 million in damages.

Sharga said such cases are the exception to the rule, and he defended mortgage servicers. “We’re dealing with an unbelievably complex situation: 51 sets of foreclosure laws (all 50 states plus DC) being executed by 3,140 county administrators, executed by multiple trustees who are dealing with different contracts from dozens of lenders and trying to address 3 million individual loans,” he said. “That’s a recipe for dysfunction.”

Maybe so, but lenders and servicers need to face the consequences of ousting innocent people from their houses, said John L. Smith, a columnist for the Las Vegas Review-Journal who championed the Thitcheners’ case.

“What do you suppose would happen to you if you inappropriately seized someone’s home, contacted a Realtor, had it sold and pocketed the profit?” he asked. “After you made bail, I mean.”

One Response to “Weapons of Mass Eviction: Faulty Intelligence in Mortgage War Increases “Mistaken Foreclosures””

  1. Kalima Robertson March 25, 2010 at 10:56 am #

    WOW the same thing happened to my family and I in July of 2008. We are still in litigation with Country wide/Bank of America STIll.

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