FORECLOSURE IN CALIFORNIA
A CRISIS OF COMPLIANCE
AEQUITAS COMPLIANCE SOLUTIONS, INC. | 1
The City and County of San Francisco’sOffice of the Assessor‐Recorder retainedAequitas Compliance Solutions, Inc. toreview 382 residential mortgage loantransactions (the “subject loans”) thatresulted in foreclosure sales that occurredfrom January 2009 through October 2011.
Over this period, there were 2,405foreclosure sales. The subject loans thusrepresent approximately 16% of the total.(See Appendix B – Methodology.)We analyzed the subject loans to determinethe mortgage industry’s compliance withapplicable laws. Specifically, we focused ouranalysis on important topics relating to sixSubject Areas:
Notice of Default
Substitution of Trustee
Notice of Trustee Sale
Suspicious Activities Indicative of Potential Fraud
Conflicts Relating to MERSOur Subject Areas and the topics weexplore therein may not be exhaustive.Nonetheless, we believe our analysispresents an accurate picture of the natureand frequency of the mortgage industry’sperformance respecting compliance withimportant aspects of California’s non‐ judicial foreclosure laws.Overall, we identified one or moreirregularities in 99% of the subject loans. In84% of the loans, we identified what appearto be one or more clear violations of law.
Throughout this paper, we are offering no opinion on themerits of various legal arguments put forth by the industryor those representing homeowners. We simply report theexceptions found based on publicly available facts and ourunderstanding of applicable regulations. We explain ourunderstanding of such regulations in the discussionsalongside the specific exception rates presented herein. It isour goal to present only objective findings of facts.
(In this report, we refer to bothirregularities and violations as“exceptions”).As Figure 1.1 shows, we found significantexception rates across all Subject Areas.
Figure 1.1 Loans Exceptions by Subject Area
Figure 1.2 illustrates the volume of exceptions. The
represents thepercentage of the subject loans with variousexception counts. For instance, “≥1” showsthe percentage of subject loans with one ormore compliance exceptions. Likewise,“≥5” shows the percentage of subject loanswith five or more compliance exceptions.The bars show both exceptionsrepresenting clear violations of law andthose where the facts identify likely orpotential violations.
Figure 1.2 Loans with One or More Exceptions
Figure 1.3 shows the percentages of loanswith multiple exceptions across different
0% 25% 50% 75% 100%
≥1≥2≥3≥4≥5Clear Violaons Likely or Potenal Violaons