by Annys Shin for The Washington Post
September 20, 2011
Lenders may have foreclosed on hundreds of homeowners in Prince William County, Manassas and Manassas Park using unreliable, “robo-signed” documents, according to a report by the group Virginians Organized for Interfaith Community Engagement.
Virginia has one of the fastest foreclosure processes in the nation. And Prince William was one of the first and hardest-hit areas of the Washington region in the foreclosure crisis. More than 10 percent of households in the county went into foreclosure between 2004 and 2009, VOICE said. Concerns about bogus paperwork led several banks and states last year to temporarily halt foreclosures.
A team of more than 30 VOICE volunteers found widespread irregularities in a random selection of more than 1,600 real estate records, which amount to 10 percent of the foreclosures filed between 2004 and 2009, when foreclosures in Prince William peaked. They found that one employee of a loan processing firm based in Jacksonville, Fla., signed foreclosure documents as an official for seven different banks. They also found mismatched signatures for the same notary public.
“Robo- signing and the speed of the foreclosure process in Virginia have hurt homeowners,” said the Rev. Clyde Ellis, senior pastor of Mount Olive Baptist Church in Woodbridge. “There is no way to know how many could have avoided foreclosure if the process simply worked.”
Luis Lemus, 19, of Dale City, who was one of the volunteers, said his family is facing foreclosure after their lender, JP Morgan Chase, lost their loan modification documents.
The bank, he said, “held families like mine to high standards” yet fell short of them when initiating foreclosures.
His parents bought their house in 2001 but obtained a loan modification in 2009 after a loss of income. A year later, Luis Lemus’s father, Edgar, received a letter from the bank saying it had no record of the modification and threatening foreclosure.
Edgar Lemus, 51, said the family is determined to avoid losing their home. “We have all the savings in this house,” he said.
The foreclosure paperwork problems are a legacy of the housing boom, when mortgages were sold, resold and bundled into securities at such a rapid clip that there was often not enough time to file the proper documents at local courthouses. In some states, homeowners have successfully challenged their foreclosures, arguing that lenders did not have the documents to show that they owned their loan. But judges in Virginia have so far sided with lenders and loan processors.
About a quarter of the foreclosures reviewed by the VOICE volunteers were initiated by officials with the Mortgage Electronic Registration Systems (MERS), a Reston-based firm that tracks more than 65 million mortgages nationwide and helps lenders quickly reassign loans as they are sold from one bank to another.
In July, a Circuit Court judge ruled that MERS has the right to act on behalf of lenders.
Chris Brown, the Alexandria attorney who represented the homeowners in that case, said homeowners in Virginia will continue to challenge foreclosures until the Supreme Court of Virginia weighs in.
“You can’t slap together documents and take people’s houses,” he said. “It’s going to come to a head.”