Mortgage Fraud
Strike Force!
August 4, 2011
California State Atty. Gen. Kamala D. Harris has subpoenaed CitiGroup Inc. and its banking subsidiary, CitiBank, ordering the two entities to answer questions regarding the selling and marketing of mortgage-backed securities in the Golden State, a person familiar with the investigation said. The person, who was not authorized to speak publicly about the matter and spoke on condition of anonymity, would not further characterize the nature of the investigation. Spokespeople for the attorney general’s office and Citi declined to comment.In May, Harris announced the creation of a Mortgage Fraud Strike Force that would target mortgage fraud of any size. Harris said then that she would tackle corporate fraud, including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses. To prosecute some of the cases, Harris said she would use California's False Claims Act, which makes it a crime to defraud the state.
The probe comes as several other investigations into the practices of other large banks are underway. New York and Delaware have more than a dozen attorneys working full time on a wide-ranging investigation into Wall Street's role in the mortgage meltdown. Those investigators have subpoenaed or requested information from 13 financial firms, including Goldman Sachs Group Inc. and JPMorgan Chase & Co. Citi is not a focus of that probe.
Citi is one of five large banks negotiating with a committee of all 50 state attorneys general probing banks' servicing and foreclosure practices. Those negotiations are still underway.
Updated: July 15, 2011
East Bay home sales climbed sharply from May to June as short sales and bargain prices brought in buyers, but sales were lower than a year ago. In Alameda County, a total of 1,584 new and existing single-family houses and condominiums changed hands in June, up 17.4 percent from May, but down 4.8 percent from June 2010, said a report released Thursday by MDA DataQuick. The median sales price was $351,000, up just under 1 percent from May, but down 12.3 percent from a year ago.
Contra Costa County saw 1,692 homes close escrow last month. That's a 14.1 percent gain from May, but down 2.1 percent from a year ago. The median price was $268,000, up 5.1 percent from May, but down 5.5 percent from a year ago. Contra Costa County is seeing more short sales, which helps explain the sales volume increase from May to June, said a broker-associate with a Danville office of Realty. He also saw that as a good sign for the market. "I think people are starting to realize we are probably at the bottom or close to the bottom," he said.
Low interest rates are helping to push sales, but so are price cuts on individual properties, said an agent with a Fremont office of Realty Experts. "They may have spurred a lot of buyers to make a move, especially in the higher end," he said. The expert also said he had a property -- a five-bedroom luxury home in Union City -- that was listed at $945,000 a few months ago. "Nothing happened. We dropped it to $880,000 last week and had multiple offers. Now it's pending," he said.
The nine-county Bay Area saw a similar sales spike from May to June. A total of 7,998 homes changed hands, up 14.5 percent from May. The sales spike was almost three times the normal increase that happens between May and June, when springtime brings out homebuyer, although higher May-to-June gains occurred in 2008 and 2009.
Last month's sales volume turned out to be the highest for any month since June 2010, which marked the end of a federal program that provided tax credits and spurred sales a year ago. Median sales prices continue to struggle in response to sales of lower-priced properties and a sluggish market for move-up buyers, the report said. June's median sales price of $377,750 for the Bay Area was up 1.5 percent from May but down 7.9 percent from a year ago.
Still, last month's sales were 4.5 percent lower than June 2010, and 21 percent below the June average going back to 1988, the report said. And for the first six months of the year, sales were off slightly from the same period a year ago. A total of 38,783 homes changed hands from January to June 2011, a 4.3 percent drop from a year ago.
DataQuick says the month-to-month spike in sales happened not just in the Bay Area but throughout the state. "It's difficult to point to one specific thing that caused last month's sales to jump more than usual from May. It wasn't just in the Bay Area -- we saw it across much of the state. June likely benefited from a combination of factors, such as price reductions, low mortgage rates and perhaps a batch of short-sale transactions from spring that took months to close. Bargain hunters, mainly investors and first-time buyers, remain very active," John Walsh, DataQuick president, said in a statement.
He went on to say: "Let's keep in mind, however, that last month was not a particularly strong June, historically speaking, and one month's increase in sales from the prior month doesn't constitute a trend."
Updated: June 20, 2011
California Penal Code on Forgery -- Check your Deed or Mortgage Assignments!
See Related Blog: Free Credit Reports
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Typically 120 days
- Right of Redemption: Varies
- Deficiency Judgments Allowed: Varies
In California, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.
Using this type of foreclosure process, lenders may seek a deficiency judgment and under certain circumstances, the borrower may have up to one (1) year to redeem the property.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:
A notice of sale must be: 1) recorded in the county where the property is located at least fourteen (14) days prior to the sale; 2) mailed by certified, return receipt requested, to the borrower at least twenty (20) days before the sale; 3) posted on the property itself at least twenty (20) days before the sale; and 4) posted in one (1) public place in the county where the property is to be sold.
The notice of sale must contain the time and location of the foreclosure sale, as well as the property address, the trustee's name, address and phone number and a statement that the property will be sold at auction.
The borrower has up until five days before the foreclosure sale to cure the default and stop the process.
The sale may be held on any business day between the hours of 9:00 am and 5:00 pm and must take place at the location specified in the notice of sale. The trustee may require proof of the bidders ability to pay their full bid amount. Anyone may bid at the sale, which must be made at public auction to the highest bidder. If necessary, the sale may be postponed by announcement at the time and location of the original foreclosure sale.
Lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.
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