As investigations into the mortgage services industry continue across the country, the register of deeds of South Essex County in Massachusetts, John O’Brien, has uncovered a large problem. Concerned that local banks were not paying transaction fees to the county when trading mortgages, O’Brien conducted an audit where he discovered that 75 percent of the mortgage assignments, or transfers from lenders to investors, issued in his county were invalid. Business Insider has the details:
Of the mortgages issued in South Essex County, “16% of the assignments were valid, 75% were invalid, and 9% were deemed questionable. Of those that are invalid, 27% were fraudulent, 35% showed evidence of robo-signing, and 10% violated the Massachusetts Mortgage Fraud Statute. The proper owner of the mortgages could only be determined 60% of the time.
In a release by his office O’Brien said: ‘…I suspect that at the end of the day we are going to find that the taxpayers have been bilked in this state alone of over 400 million dollars not including the accrued interest plus costs and penalties. The Audit makes the finding that this was not only a MERS (Mortgage Electronic Registration Systems) problem, but a scheme also perpetuated by MERS shareholder banks such Bank of America, Wells Fargo, JP Morgan and others. I am stunned and appalled by the fact that America’s biggest banks have played fast and loose with people’s biggest asset — their homes. This is disgusting, and this is criminal.”
O’Brien is urging Massachusetts Attorney General Martha Coakley to “back out of the proposed foreclosure fraud settlement with banks until the full extent of damages can be ascertained.”
This only adds another page to the recent revelations regarding improper practices that still exist in the mortgage industry. Predatory lending, robo-signing, and foreclosure fraud have sparked investigations and lawsuits from many state’s attorneys general. A recent ProPublica investigation found that bank errors are continuing to cause improper foreclosures.