Home foreclosures have touched the lives of hundreds of thousands of people across the U.S. in recent years, including the residents of Hawai'i. Pacific Business News reported that an average of 400 foreclosures are filed throughout the state per month.
While the reasons for each foreclosure vary, there seems to be an increasing instance of claims that banks are utilizing shady or even fraudulent tactics to force people out of their homes. One such tactic is commonly called robo-signing, and as CBS reports, it is rampant.
The term robo-signing applies to a variety of techniques that lenders may use to put a foreclosure proceeding into motion. In many instances, mortgage affidavit documents are alleged to have been signed by fictitious people, or former employees of mortgage servicing companies. One such name is Linda Green, whose signature has been reported to appear on over 1,300 documents received by the deed office of Essex County, Massachusetts.
A banner admonishing Wells Fargo flies above the Tehiva-Phillips home in Hana during a protest on Jan. 1 and 2. The family alleges that Wells Fargo, through American Home Mortgage Servicing Inc., repeatedly requested payments to keep the mortgage out of foreclosure. The family complied, sending payments up to $8,500, which they say were later returned.
Photo: Brady Townsend
In fact, Massachusetts Attorney General Martha Coakley filed suit against five major banks--Bank of America, Wells Fargo, JP Morgan Chase, Citi, and GMAC--on Dec 1, 2011, alleging deceptive mortgage loan practices.
Hawai'i's current monthly foreclosure figures are actually significantly lower than highs of 1,000 per month in May 2011. The smaller monthly tally was due to the signing of Act 48, governing the way that foreclosures are now handled. The new provisions require lenders to provide the owner-occupants a chance for face-to-face mediation before a foreclosure sale in the instance of non-judicial foreclosures.
The act was signed as SB 651 by Gov. Neil Abercrombie in May and passed to provide protection for families in Hawai'i that may be facing foreclosure. Hailed as a landmark bill and one of the strongest in the nation, it was aimed at curbing what has been as abusive practices by lenders.
Unfortunately, the rewrite has brought a phenomenon that largely affects the way that foreclosures are brought against owner-occupants in the state. In what many deem as a sleight of hand to avoid adherence to Act 48, non-judicial foreclosures are being converted to judicial foreclosures.
Fannie Mae was the first to take advantage of this loophole with its announcement to convert all of their non-judicial to judicial foreclosures in June 2011.
One Maui family gained national attention on Dec. 2 when they called on activists for help in order to stay in their home. The Phillips-Tehiva family received a notice of criminal trespass and intent to prosecute on Dec. 23, 2011. The notice gave them until Jan. 2 to leave their home, which had been in the family for 100 years.
Occupy Wall Street Maui members and others drove in from Upcountry and Kihei to camp in front of the home on Hana Highway from Jan. 1 to 2. In the end, lender Wells Fargo agreed to a stay after the family's attorney presented a motion to present new evidence in the case.
The family alleges that Wells Fargo, through American Home Mortgage Servicing Inc. (AHMSI), repeatedly requested payments to keep the mortgage out of foreclosure. The family complied, sending payments up to $8,500, which they say were later returned. AHMSI was unable to comment by press time.
"It wasn't that they couldn't pay," said paralegal Virginia Parsons. "They just needed a modification. The bank would not agree to a modification until the payments were three months delinquent."
The issue has been taken up nationally by the "Occupy" movement, which organized a national day of action on Dec. 6, 2011. In what they deemed as "Phase 2" of their protest against unsavory banking practices and unfair distribution of wealth, protesters have turned their attention to bank-owned foreclosures. They occupied foreclosed homes in cities including New York City, Oakland, Chicago, Atlanta, South Gate, Detroit, Rochester, Sacramento and Portland.
"It's hard to wrap your head around the fact that some of our largest financial institutions are committing fraud," said Occupy Wall Street Maui's Netra Halperin.
She and others have organized local occupations of foreclosed homes, along with letter writing campaigns to the Legislature demanding an end to robo-signing.
"I know state politics," said Halperin. "You can effect change when you say something in the right moment and in the right committee. We have to have a grassroots movement, because we are at such a dire straits. We need a mass movement. We need politicians to pick up the ball. Everyone from every side has to work on this to make change."