Foreclosure Trustees — Friend of the Big Banks in Statehouses?

In the foreclosure saga that continues to rip communities apart, there are two obvious players: banks and homeowners. But the situation is a little more complicated than just banks versus families trying to hang onto their homes.

There are also the trustees, businesses hired to handle foreclosures in states where banks can bypass the court system when they want to repossess a home. Since the trustees are being tasked with taking away a person’s most valuable asset, one would hope they’d be disinterested parties making sure everything’s being done by the book. But trustees make their money off foreclosures – and they’ve been throwing their weight around in state legislatures to keep foreclosures running full steam ahead.

Here are some of the positions taken by the trustees’ trade group, United Trustees Association (UTA) – and it seems like they’re looking out for the big banks as much as for the trustees themselves:

Chain of custody on the mortgage note has become a big issue – and a big scandal – because banks have bought and sold most mortgages so many times that there may be no paper trail left. Hence the robosigning scandal (and 50-state Attorneys General investigation), in which it emerged that foreclosure mills were fraudulently signing documents to repossess homes.  A recent audit of foreclosures in San Francisco County found that, of 400 foreclosures examined, almost all involved a violation of the law –in 45 percent of cases the house was taken by an entity that didn’t have a documented claim to the house, the kind of chain of title issue the UTA was happy to see stripped from the Washington bill.

If trustees make their money off foreclosures, it’s easy to see why they’d lobby against legislation designed to stem the tide of foreclosures – a happy convergence of their interests with the banks.’ But what about when the trustee company is the bank? That’s the situation with Recon Trust,  a subsidiary of Bank of America against which Washington’s Attorney General filed suit in August. Whether owned by the banks or independent, the trustees seem to know which side to take in the battle between homeowners and banks – and they’re not with the homeowners.

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