We need justice on foreclosure fraud


Investigative reporter David Dayen calls foreclosure fraud “the largest consumer fraud in the history of the United States.” He cites “multitudes of evidence about fake documents, forged documents, illegal foreclosures, foreclosures on military members while they served overseas, foreclosures on homes with no mortgages, breaking and entering into the wrong homes, suicides by foreclosure victims.” There has been “complete lack of accountability for these crimes and abuses.”

Mention of the issue has virtually disappeared in the mainstream media. But this month, Elizabeth Warren changed all that. The senator from Massachusetts got national headlines when she denounced the regulators for their cozy relationship with the banks and the consultants hired to evaluate foreclosure sales. She was outraged at the pathetic settlements for victims (in most cases, borrowers will get just a few hundred dollars) and criticized the regulators for withholding documents and information from Congress.

She said, “You have made a decision to protect the banks but not to help the families who were illegally foreclosed upon. You know of cases where the banks broke the laws, but you are not going to tell.”

Meanwhile, in Colorado, a foreclosure reform bill (HB 1249) in the legislature was killed in a House committee without much fanfare. Twenty-nine individuals from all across the state had testified about banking abuses, predatory lending and fraudulent foreclosures.

This was a second defeat for the sponsor, Rep. Beth McCann of Denver. In last year’s legislative session, she sponsored a similar bill, HB 1156, which was killed in the Republican-controlled House Economic and Business Development Committee. Foreclosure reform supporters hoped they would have better luck this session with Democrats in control of the House and the Business, Labor, Economic, and Workforce Development Committee that considered the bill, but they were wrong.

The bill, as originally introduced, would have mirrored last session’s bill designed to change legislation passed in 2006 that only required a bank or servicer to present an affidavit that they had the right to foreclose. Homeowners would have been given more leeway in a Rule 120 hearing in challenging the foreclosure. Banks and servicers would have had to produce actual paperwork proving ownership. That seems more than reasonable.

But the bill as presented to the committee was substantially weakened under pressure from banking and real estate interests. The part about having to produce documents was deleted. What was left in the bill addressed the issue known as “dual tracking,” in which a borrower is simultaneously seeking a loan modification while the lender is proceeding with foreclosure. But even after the bill was watered down, the banking and real estate interests still opposed it.

The Colorado Progressive Coalition and the Campaign to End Unjust Foreclosures worked hard for McCann’s bill. Corrine Fowler, the economic justice director of the CPC, was outraged at what happened. She said, “The bill, as amended, would simply have provided the homeowners with a degree of due process that does not currently exist. The current foreclosure hearing gives homeowners absolutely no voice against the banking industry when they violate state or federal laws. The people of Colorado asked the state legislature to follow their oath to protect the people of Colorado under the U.S. Constitution, which requires due process prior to one being deprived of life, liberty and property.

In every other instance I can think of, the litigant bringing the claim bears the burden of proving it has standing and is the real party in interest to invoke the court’s subject matter jurisdiction — not so in Rule 120 foreclosures.”

When the first foreclosure reform bill was killed, activists rushed to start a petition, Initiative 84, to amend the Colorado Constitution. In Boulder, the Rocky Mountain Peace and Justice Center coordinated the petition campaign (as it has supported many other social and economic justice campaigns of the CPC). Unfortunately, there was too short a time span to gather signatures and not enough volunteers and money for a big battle in the fall 2012 elections. But Democratic leaders promised foreclosure reform in the next session. Dems won control of everything in Denver in the elections and we got screwed again.

Colorado still has the 10th highest rate of foreclosures in the country.

Where’s the change?

Respond: letters@boulderweekly.com

This opinion column does not necessarily reflect the views of Boulder Weekly.