Turn On The Lights, Watch The Roaches Scatter Part 51

As the foreclosure mills get ready to start up in January, it's important to note that 27 states don't have judges decide foreclosure proceedings, and in those states, trustees hired by the banks conduct proceedings for evictions.

All 50 U.S. states are investigating whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. Attorneys general in non- judicial states, including Arizona, Texas and Washington, are conducting independent probes of mortgage foreclosure practices and examining the documents used to secure foreclosures.

“Washington’s foreclosure process frequently includes inaccurate documents, conflicts of interest, faulty chains of title and failures to provide the disclosures and conduct mediations required by law,” state Attorney General Rob McKenna said at a press conference on Oct. 13.

McKenna sent out about 50 letters that day to trustees operating in the state, asking them to suspend all foreclosures where documents hadn’t been confirmed as legally signed, or where the chain of homeownership wasn’t clear.

“Our consumer-protection division has already begun investigations regarding several trustees,” he said.

Washington will have about 40,000 foreclosures this year, up from 31,000 in 2009, according to Statewide Poverty Action Network in Seattle. The state is ranked at 17th nationwide, said Danielle Friedman of the network, an advocacy group for the state’s poor.

“A handful of trustees do the vast majority of the foreclosures” in Washington, said Jim Sugarman, assistant attorney general. About 60 trustees operate in Washington, he said. Most are affiliated with law firms, he said. Trustees receive a set amount of money to handle a foreclosure based on the difficulty of the transaction, he said.

The trustee system was set up as a “more efficient and less costly alternative for both the borrowers and the lenders,” said Lance Olsen, a Bellevue, Washington, attorney. In a judicial foreclosure state, the borrower “could end up with half of the default owed in attorneys’ fees in a few months,” said Olsen, who represents Northwest Trustee Services in Bellevue.

Opponents of the system “want the outside independent review of a judge,” he said. “That’s a valid request, but it’s an expensive one for a review that’s most often not required.”

Borrowers in non-judicial states can still sue to stop a foreclosure, he said. 

But when the banks are using the MERS system, the "efficient" system is designed to foreclose as quickly as possible, even when the bank doesn't own the mortgage note.   And that's the real problem.  Thousands of homeowners don't have much in the way of recourse in stopping this freight train that will get back on track in January.

How many homeowners will be illegally railroaded into foreclosure?  We may never know.