Bonnie MacCracken is on a mission to help victims of “fraudclosure” stand up for their rights.
MacCracken, a land title examiner based in Amherst who is running for Hampshire County Register of Deeds, wants people to know that foreclosure fraud is not just in Florida and Nevada but in Western Massachusetts, and not just in Springfield but in the upper Valley.
And she wants them to know that if their home ownership documents have been falsified, they may be able to stave off foreclosure if they understand the robosigning scandal and the way it has affected the land registration and title system.
The robosigning scandal didn’t stop the machinery of foreclosure that’s left millions of Americans evicted from their houses, but it certainly put a brake on it. The epidemic of robosigning—putting automatic, often falsified signatures on home ownership documents, a job done by people working at minimum wage for companies hired by banks to “process” deeds and other paper work—gained widespread attention last year, when it was the subject of an eye-opening expose on 60 Minutes.
The program showed what purported to be the signatures of bank officials, most often a loan officer fictitiously named “Linda Green,” on multitudes of documents presented by banks in support of their rights to foreclose on property.
The documents not only did not provide clear information about who owned the property, and therefore had a right to foreclose, but actually muddied the ownership issue. At the time the show aired, many foreclosure victims with the presence of mind to examine the documentation on their homes had managed to ward off foreclosure, particularly in states in which banks are required to get court approval before foreclosing.
Massachusetts has no such requirement, but even here, MacCracken points out, “Homeowners do have a statutory right to request that the holder of their mortgage produce their promissory note within ten days of the request.” And if the lender can’t produce the documentation, or if the documentation is flawed, a homeowner may be able to halt foreclosure proceedings.
The robosigning happened because banks wanted to streamline the foreclosure process when the housing bubble burst. Earlier, the financial services industry had created a system called MERS (Mortgage Electronic Registration System) to assist in the slicing and dicing of mortgages for resale to investors. MERS gave institutional sellers an accelerated way of dealing with—and often, in effect, circumventing—the land recording systems in county registries of deeds.
Mortgages fed into MERS were registered automatically—electronically—in the registries of deeds in the counties in which the properties that secured them were located, making MERS the owner of record. But subsequent sales were only recorded with MERS, not with the registries of deeds. So information about the real owners of the properties no longer resided in the registries of deeds, a state of affairs that in some cases has been declared illegal on the grounds that MERS invests nothing in the properties and so cannot be the owner.
It’s all not been helped by the fact that many documents generated by MERS have been inaccurate, or even lost or destroyed. MERS is the bete noire of many registers of deeds, like Southern Essex’s John O’Brien (“Occupy the Registry,” December 1, 2011), who says it has contaminated his registry with thousands of invalid documents. O’Brien has also retained experts to identify robosigned documents and then refused to record them, leaving lenders without the documentation needed to foreclose.
“MERS became its own land registry system,” says MacCracken. “We can’t access [the documents it generates].” That has been a nightmare for people trying to get their mortgages modified, MacCracken says. In particular she remembers one woman in the Valley who tried to get a mortgage modification after the value of her house dropped by $100,000.
“In her off time after 12-hour shifts… as a nurse, she’d call the bank, and every time she completed the paper work, MERS had switched to a different owner of record,” MacCracken says. “The switches of ownership were not recorded. It was impossible to search.”
That muddying of titles, MacCracken points out, makes foreclosed MERS properties difficult to resell. “I’m told that now to purchase anything that’s been foreclosed is very risky,” she says. “Lenders walk away because titles are so bad. Towns are forced to foreclose on [properties with] tax liens, and that makes the property marketable, but the city bears the cost of securing and selling it.”
People threatened with foreclosure, according to MacCracken, should examine the documents supplied by their lenders. If the homeowner was not given proper notice of foreclosure; if the mortgage has not been specifically assigned to a new owner and properly recorded; or if the documents were robosigned (the Linda Green signature is a giveaway, but it’s not the only clue that papers were improperly signed; a land title examiner or attorney can help make that determination), the homeowner may be able to get relief with the help of a lawyer or through a free program like the foreclosure prevention initiative administered by HAPHousing in Springfield (413-233-1622; 1-800-332-9667 x. 16220).
And though Massachusetts doesn’t require court hearings before foreclosure, in some cases the fact that the lenders’ documents were flawed or missing has gotten homeowners relief even in late-stage foreclosure proceedings such as bankruptcy court hearings or eviction, MacCracken points out.
