equitas. my name is on the back of the report as well. there has been a lot of anecdotal evidence about foreclosure irregularities, as bill said. where there is smoke, you naturally expect to find fire. what thisç report uncovered was an honor inferno. what we did was we looked at 60% of foreclosure sales over a three-year period and focused on six areas. we actually have that. we look at documents that were recorded at the county recorder's office and we also looked at public information federal filings, such as sec filings in connection with securitization.

the first page is an introduction that just gives some summary statistics. then we go into each area and talk about the topics in each area and explain them with the knicks -- exception rates that we found. çgenerally, assignments, loans- in today's modern market, they are sold to various parties. most of them are ultimately securitized. every time there is a sale, the seller assignsç to the buyer a document. we look bad relations with that assignment. we looked at disclosure requirements that must be given to the borrower. we looked at substitutions. when a foreclosure is initiated, generally, there is a trustee. the trusty oversees the foreclosure process. when foreclosure is initiated,

there is substitution of the original trustee to a firmç tht specializes in 0 closure defiled services and processing. there are regulations around that because only one entity can be in charge of the process. we looked at the notice that had to happen, timing and notice requirements, before a trust sale, foreclosure sale happens. we then lookç at suspicious activity, robo-signing, backdating, suspicious signatures. and then we looked at the electronic registry maintained by the mortgage industry that tracks loans. we tracked what was in the county record to see if there were conflicts. we found a significant number of complex there. 58%. -- conflicts there.

we go into each of these in the report and talk about what we're looking at. we try to explain it in plain english, showing you the different exceptions within each of the subject areas. not only did we findq issues and 99% -- irregularities in 99% of loans. 84% appeared to be clear violations of law. but it was not that we found one issue in 99% of those loans. two-thirds of them had four or more issues. four of irregularities, violations of law, or more. more than 75% of the loans had violations within three or more subject areas. it is not that we found -- these loans did not have one thing wrong with them. they had many things wrong with

themç across different subject areas, across different parts of the foreclosure process. that goes further to substantiate the conclusion we made, which is that the foreclosure process in the merit -- california, which is basedçn laws dating back over 100 years, no longer adequately regulates the current mortgage market. these laws were promulgated before there were things like securitization and real estate capital markets. we are not here to indict the mortgage industry or to say that all people who lost their home did not deserve to lose their home. certainly, there was a reckless borrowing. there were good actors with in the mortgage industry that have just been caught up in a situation where the boom in production of the originations

could not stand the ultimate pressure on the for closure system in california once the boom turned into a slump. >> thank you. i know we have a lot of information and a lot to digest. it has taken me quite a while. i am happy to openç up to questions. >> you sense this data is representative of california. the cost of properties in san francisco, was that a factor, too? >> what we are looking atç is e process of foreclosure. we are actually having fewer foreclosures in san francisco thant( riverside, sacramento, stockton. weç did look at some of the

higher propensity for closure areas, to look at that, but i believe these are factors that not only act locally, but nationally. when we have seen is, there were studies done in massachusetts, north carolina, where similar trends have happened. what we are seeing is literally the industry following -- not followingç certain laws in plae in this foreclosure process. you see people saying they represent an agency they do not, and work for another agency. one of the many examples is if i were acting on behalf of the new lender but said i was working for the old lender that is now bankrupt, saying that they sign the property over to me. that would not happen if i asked for your home.

ok>> is the pure volume of foreclosures a factor in this? >> and that might be one of the reasons. i do not think the system was prepared for this level of volume. what we are seeing across the country, in terms of real estate, is not a cyclical bust. there are ups and downs,ç just like any economic situation. this is a huge correction, an industry correction. this is not just a regular cyclical correction. for example, to give you some numbers, during the dot com bust, we had 2400 people applying for assessment appeals. two years ago, we had 6600 people file. we are doing about four ti dot com bust.

>> about the irregularities, i wonder if it is something that is prosecutable? >> i am not a lawyer. clearly, we see across the board was that were not followed. i think it will have to be up to our local district attorneys, attorney-general to make surseer they believe this is prosecutable. >> and why does this matter if you can not validate the sale? >> these transactions, based on many of the laws that were not followed -- >> if nothing can be done about

it, if you're law -- if your office cannot write a letter to somebody and say that the filing was incorrect, the sale is not valid, therefore, you do not own the property -- >> absolutely. we cannot do is help people who may have moved away. i think we will be able toç hep people who currently own çproperty in san francisco, trying to get loan modifications, in the middle of foreclosure process. çfor the first time, there is real evidence to demonstrateç w ñrbroken the@]emq we really need sacramentoç, our legislature, governor, and legal entities to look at the heart of what this intermission says, to see what the next steps are. no question, there needs to beç an organizational restructuring of thisç industry because it is

not a market >> [inaudible] your office is going to do when they come in with papers. will you be looking for certain things, telling people involved that this is incorrect? >> we have legislation that we sponsored last year. what it does is solve many of these issues. we need to record all of these various documents a( áru@&e%ei time during the foreclosure process. it doesñr not mean that every ln needs to do this. for those that are not facing problems, we will not force the industry to do it. but if you are going to foreclose on people, you should be able to fill in these gaps. we are in conversationç with te industry to figure out how we can do that soç that it does nt

skyrocket cost for lending. i do not think we want that for home owners, butç also, we cano it so the detective do notw3 hae to sniff out these things. there will also be other legislation we will be looking at, whether we co-sponsored it orç not in sent to cisco, to se if it can address these other issues. >> certainly, some of these violations result in foreclosure sales that may be unavoidable, but their real purpose of this was to try to quantify the nature and frequency of issues in california and san francisco generally. çwe are improving the market. fundamental to this is the notion that a clear chain of title, integrity of public

records, isç essential forç a stable housing market. until we correct that, we have no way of insuring this crisis does not happen again in the future. there are other agencies been that are going to look at this from the press editorial standpoint. çour viewpointñr is really froa policy standpoint to stop public this from happeningiwç again, ad to modernize california real- estate laws to reflect them. ç>> could somebody come to your office and say, iç went through foreclosure. i understand there isçñr some paperwork. do i hire a lawyer and go through this? >> that is how a lot of this started. people would come inç for a refinance, they could not find

their original lender. çthey did not know who owned te loan. they just asked us to print out the documents for us. there are many gaps. ççif anybody wanted to, they e welcome to. they can go through their records, and beer have been to present. they can decide what other future action to do. while i feel bad for the folks that may have faced in ballot foreclosures, this is all about moving forward. we have hundreds of thousands of homeowners in san francisco today. we need to make sure, moving çforward, that the process is transparent and fairç in the future. right now, this report demonstrates that it is not. >>ç do you see this being doney

a private financing agency? what kind of violation to you see? >> multiple violations from multiple parties of parties in the value chain. we certainly had issues by a purported beneficial interest holders. entities that had reportedly purchased the loan and were entitled to the loan. in many cases, they do, but there were not able to document. we also saw. laird is by the servicers and trusties, the entities that specialize in tearful services and foreclosures. -- the fall services and foreclosures. çyou asked earlier, is this jut

a matter of the volume of foreclosures? it is also a matter of the bottom of originations. the production machine was running at 126% of capacity. they were having some problems documented and archiving documents. when things turn bad andç the have to recreate that chain of title and you have to lookç at the documentation around the assignments, who owns the loan, some of the documents were missing or was not prepared. çit does not mean the sale did notç happen, but there is no evidence of it. >> are we talking about criminal problems, or are we just talking about other problems flowing over -- >> sometimes there is no çdistinction. if you have intent to compromise the integrity of the public

system, that is criminal. >> [inaudible] >> that is an excellent question. that is one question i asked as we were going through this. are these minor violations, is this is sort of jaywalking, or is this much more serious? i think what you see is a series of violations where partiesç ae been in three parties they are not. -- pretending to be parties they are not. it is like if i sign your home over toç myself, using my signature, but -- attending tö be you. we saw that over and over again we have parties representing affiliation with. ççi'll let you use your judgmt

to determine the severity of that. çmany of these actions, if not all, render many of these foreclosures invalid. again, we are not saying whether or not the basic contract was followed. someone borrowed money, somebody had to pay back money. we wereç not privy to that information. çwould we do know is, along the way of somebody losing their home, clearly, i never of beer -- parties acted illegally and acted across the board. if we had a report that said this happened 5%, 10% of the time. we are saying that somewhere along the way, this was done incorrectly. ñr>>ççó is this unit for foreclosures?

sales, in general, would you find they are the same? >> you would find similar things fair and less of an issue. when you are borrowing money and paying the loan off and everything is fine, there isç t really this issue. this issue comes up when people are trying to refinance or if there has been a foreclosure. it is not just endemic to the foreclosure process. this is a problem with the industry and how we are borrowing money, how it is being recorded, and how the industry is forming that information. we have a system that was created when used to walk to your street corner, see your lender, it was their money, and when you pay off your mortgage, the lender was made whole. now you have a system where you

do not even need to walk into a bank. you can do it online. they may keep it, but often, they are selling it as a huge stream to promise to investors. they were packaged in a way that çwere obviously problematic. and then they are sold. ñrthese large pension funds, large investments, are not getting the money back, and you see this crumbling affect. the biggest problem has been a huge amount of wealth that all of us have lost as a country. home owners and investors across the board. ç>> [inaudible] ç>> our legislation -- one of e

majorç issues with this, you he issues around backdating, issues çaroundç parties pretended toe other parties. that would not happen if every party, along the way, would it be asked to record the documents. we're not supposed to record them at the time they are doing it. we have legislation that is working toward that goal and we're sitting down with industry to find a way to do it so that it does not make it more expensive, adding a lot of time to the process. there is also numerous legislation going through sacramento to see if it can help many of the issues we addressed. we are giving a copy of the report to the attorney-general because of the settlement, immunity from many of these issues. they will determine whether or

not there were to pursue this. >> [inaudible] >> it was a representative sample. you can look at the foreclosure map. there were areas of concentration where there were greater foreclosures. those are proportionately represented within the sample, but it was across income type, alone tight. it was not initiated by the home owners. yes, a blind study. ç>> the only selection we did s we selected equitas. >> equitas provides audit and regulatory compliance consulting, litigation support, all are run mortgages.

from originating, to services, to foreclosures. we're pretty comfortable with this stuff. we do it master -- nationally. >> [inaudible] [inaudible] ç>> that was the biggest

challenge. as the recorder for the county, we are charged with maintaining the records. many people will record all sorts of documents and we cannot determine the legal ability -- validity for everything submitted. we had more and more instances of invalid conduct where we decided to take a much closer look at issue. lou mentioned -- the red is where the most numberñr of documents were. yellow focused on the next higher percentage. the next was in green. so these are represented samples based on where the foreclosures were occurring geographically. you can see the neighborhood that was had the hardest was the

southeast part of town, which is very diverse, probably the lowest amount of income area. [inaudible] >> that is all we have time for right now. ok, last question. >> it sounds like you want to have the legislature passed law laws [inaudible] i wonder when you are going to accomplish. it is just a new law for people to ignore. are there many, any cases where the law has banned properly followed? >> we do not know. we have not been able to get in touchç with each of the home

owners. people have not necessarily come forth. that will be the next step, determining that. we will be giving this information to housing counselors. ç>> [inaudible] >> i completely agree. we are saying the whole system is broken. i do not think passing a single law will change the system, but many to step back and reevaluate how we can revamp the system. these laws were passed over 100 years ago when you did not drive up to your bank. given how fast the industry is moving, now that we are using securities, wall street to add more money into this industry, how we can make it work for all of us. you are right. it will probably be manyç laws,

but the industry will need to be revamped. >> we are not indicting an industry for systemic intentional wrongdoing. we are just presenting results. maybe what we are saying is the reason why there are so many irregularities is because they do not apply to today's market. they are the wrong law. if you have something that was more applicable and helpful for the industry -- i do not think the industry want to break the law. ok, thank you, everybody.

before i take roll, let me remind everyone to turn off your cell phones or any other electronic device that may sound off during the proceedings. roll call, commissioner moore, commissioner sugaya, commissioner antonini, commissioner fong, commissioner wu, commissioner borden is expected. item one is case no. 270189d for

721 beach street proposed for continuance and you might want to consider changing this date but it's currently proposed for continuance to march 22, 2012. item 2 a and b, case no. 2011.0 304dv for 147 andover street proposed for a continuance to april 5, 2012. and that's it for your items proposed for continuance. >> do we have an alternate date for beach street? >> i would not put it on the 5 but i would put it on the 12. and commissioners, i hate to second guess myself, but because i have not talked about this with staff so they haven't notified the project sponsor, you might need to continue it to this date and on the 22nd, continue it to a further date