this means that hundreds of families in san francisco each year have the potential to lose access to rental housing due to foreclosure. they usually are unaware of the impending action and are left with minimal options and even less support. we cannot allow the rental future, credit history, and housing stability of families in san francisco to hinge on foreclosures that are processed with the regular paperwork or the robo signing for the foreclosure documents. a land mine in to this legislation that my colleagues are presenting, and my office will continue to support policy that provides a safety net for people in san francisco. supervisor mar: thank you very much. [applause]

supervisor olague: i will continued to be involved with this. questioned later. supervisor mar: with your staff, as well. >> board of supervisors, good afternoon. my name is -- i lead the firm's regulatory compliance, structure, and litigation processes. i am the co-author of a report titled to a bank foreclosure in california, a crisis of compliance." prior to this, i was a ceo bet was -- of a company that had regulatory compliance solutions for the mortgage industry. i have held positions with rbs securities, nomura, and goldman sachs, where i covered financial institutions and specialized in mortgage-related structured

products. a frequently writes -- i frequently write and speak at conferences. in 2008, i was recognized as a future leader by the mortgage banking physician and and also a member of the california bar. it is a regulatory consulting firm specializing in the investigation and audit services. we did the work with commercial appliances, including mortgage businesses, regulators, and enforcement agencies, attorneys for mortgage-backed securities holders and paternities -- and eternities for others. i am here at your request to provide some background information on the information included in the report. as was explained and reported in section 3 of the report, its purpose was to identify potential irregularities in the city and county public land records in order to improve

compliance and to affect legislator changed so that would allow the law to more adequately reflect the modern mortgage market. to accomplish this, and that have a powerpoint here, to accomplish this, there are documents filed at the city and county assessor's office with a single family residential property transferred in nonjudicial foreclosure sales. the sample was randomly sampled by staff and included 382 single-family residential properties that underwent nonjudicial foreclosure sales occurring between january 2009 and october 2011. the sample properties included all of the san francisco is it goods and comprised proportionately more loans in areas that have higher concentrations of foreclosures. over this period, there were 2405 nonjudicial foreclosure sales. the sample represents

approximately 16% of the total of such nonjudicial foreclosure sales. we reviewed all of the relevant recorded documents, including notices of default, substitutions of trustees, notices of trustees sales, and the trust deed deeds upon sale. we reviewed these documents for general defects, compliance with the substance requirements of notices and for suspicious activity, such as backdating, execution, and robo signing. we found that the recorded documents only provided a partial picture of these transactions for the interested parties involved. part of the reason for this is that the current reporting requirements under applicable state laws have some inadequacies. the efficacy of these laws is what the audit intended to illustrate. therefore, in order to provide

the assessor greater visibility into these transactions and to promote a richer context for understanding the wide range of policy and legislative alternatives, we also performed and additional analysis that consulted other sources. we reviewed the extensive information using a variety of public and private sources, including federal filings. usually, the filings with the securities and exchange commission in connection with mortgage-backed securities. we also consulted a database for the mortgage electronic registration system, known in the industry by an acronym. and other databases providing mortgage-backed dated information. we used tools to try to create as much as possible an accurate chain of title and to identify all relevant parties and foreclosure sales.

the villone reviews were performed by qualified mortgage and legal professionals utilizing the proprietary auditing software developed by attorneys who are expert in mortgage origination, securitization, in foreclosure sales. this chart summarizes our findings. we found that 75% of the subject properties had exceptions relating to assignments. assignments refers to the transfer of the deeds of trust from one beneficiary to another, usually in connection with the sale. the irregularities included recordation of conflicting assignments, conflicting beneficiaries or different beneficiaries, potential issues related to the timing of the recordation of those and potentially related to the authority to execute such transfers.

in terms of notice of default, nod's must be filed for the setting of the nonjudicial foreclosure process going. an affidavit attesting to the thames to contact the bar and explore alternatives to foreclosure. this is required under a california could, section 29- 23.5. the next category is substitutions. we found that 85% of the subject properties that exceptions relating to substitutions. i will explain what substitutions are. in many instances, the beneficiary of the deed of trust will replace or substitute the regional trusty with another trusty. this substituted trustees typically specializes in defaults and handles foreclosures. the substitution requires a

document, entitled the substitution of trustees. irregularities with the substitution of trustees included issues related to the timing of the recordation and questions related to the authority of the party making the substitution. this is important because only one party can be essentially in charge of a foreclosure sale, and if there is confusion as to which party has that authority, it could invalidate the sale. the next category is not's or notice of trustees sales. these issues included in proper timing of the filing of the notices, planned sales earlier, and questions related to the authority executing the not's.

and we found some that suspicious activities, which we defined as backdating documents, incorrectly executed documents, and possible robo cited. finally, we looked at findings related to conflicts between the public land records and what was recorded or registered in one ackerman. supervisor mar: what is that? >> it is a private registry outside the public land records where beneficiaries to the deed of trust are recorded and transfers are made outside. so instead of recording assignments, the transfers would just be maintained in the private registry outside of the public land records.

what we are looking for is instances where the investor as recorded, the owner is recorded, and it conflicted with the beneficiary in the public land records, the beneficiary and the trustees in the public land records. information was available from the database on 192 of the 382 center properties. of that 192 loans, we found conflict in 112 of those loans resulting in a 58% exception rate, meaning what was in the database, who owns the long bear, was different from who was recorded with the deed of trust in the public land records. i think the foreclosure in california report adequately describes our findings in greater detail, so i will not take up any more time repeating these findings. i think you for this opportunity to explain our findings and

summary in this report. thank you. [applause] supervisor mar: thank you, colleagues. supervisor campos? supervisor campos: thank you. i want to applaud the recorder and the company for the review. my questions have to do with the fact that my fans of the next step in this process is to figure out what we can do with the information in this report and where do we take it in the next level so we can follow up with what the findings are.

if i can begin with trying to understand the nature of the audit. there are different audits that take place, some maybe you can start. is this a forensic audit? >> i do not know what the definition of a frantic audit would be, but we did study this with the statutory requirements and tried to piece together who owns the loans and the security

instruments and what was happening. because there was some work to put together the history of title, i guess that could be called forensic, but i am not sure if you're using some sort of forensic definition. supervisor campos: will try to figure a way to do with this information. will be offices be able to seek these irregularities print >> we are in the process of working with the city attorney, the d.a., and others to make sure all information is available so

that they can do their jobs. the company is wonderful and tried to break out this information. we are also cut sponsoring a bill. most governing foreclosures are state laws. i would encourage this board to sinai or support any of those laws in the package pertaining to robo siding and a variety of behaviors and all have identified. we want to protect people's privacy, but we also want the information to be made public so people can use it.

>> in terms of the number of loans that you looked at, the total number of clark -- foreclosures if you can say why not all of them. >> mr. tang's office was working on that, so the percentage was actually quite high if you look at the residential trustees, deeds over that period, so without getting into what represents a statistical standard, and i think 18% is reasonable.

supervisor campos: this is a substantial number, but because we are looking at activity, possible criminal activity, it might be helpful for us to take this report and actually take a step further and actually look at all of the foreclosures, certainly all of the residential foreclosures that have happened in san francisco to make sure that we're actually protecting the rights of each one of those individuals. >> yes, and we are following the lead of the attorney-general. supervisor campos: as we move forward, the many members of the audience you are here and are watching, they want to see what steps local government can take,

and i think the steps outlined in the resolution are important steps, but i also think that we may also need to go farther in terms of beyond where the report takes us. it may be that we as a city may need to make an investment to do an even larger review that looks at all of the residential foreclosures that have taken place in san francisco and to the extent that there is additional information that may be the city attorney's office or the district attorney's office would need, i think it would be important for us as a city to make that investment to make sure that we take this even further, if that is the need. >> absolutely. i think also, supervisors avalos and olague had some. we want to make sure that our tenant laws are being fully enforced in terms of their

protection. but we also want to make sure that we have blight ordnances and vacancy ordnances that are being fully enforced, so i think there are a lot of local laws that have been passed. supervisor campos: and just to be some follow-ups, and i'm wondering about what you are seeing in the city compared to other parts of the city. >> what we found is similar to what john o'brien found in massachusetts. again, they have a state law, but the findings were very, very similar. i think and talking to my other colleagues who are reporters, many of them feel a need to do the further study because they believe that what we outlined is probably happening in their county, as well, so they feel that those reports findings are

fairly representative, so the players are the same. the actors are following the same laws in terms of state laws, so i think we could surmise that many things going on here is happening elsewhere. of course, california was hit by far the hardest in terms of foreclosures. >> in san francisco, you are some of the top players or lenders in san francisco? >> the lenders are not just local lenders, they are national lenders, but we purposely did not identify any of them by name, because as an industry, we found great failings, so i do not know if any actor was better or worse than anybody else. what we wanted died again were the situations we were facing, so i think what this says is that the whole system is broken, whether you are talking about the lenders or the title companies or the reporters or

the homeowners or the tenants, is just not working for anybody. supervisor campos: are there any states that use that process other than the nonjudicial process? >> there are a number that to follow the judicial foreclosure processes. i do not have all of them. i think it is 22. supervisor campos: so the big difference between the two is once you have a judicial foreclosure, you have a court actually overseeing the proceedings and assuring that the rights of the homeowners and tenants are protected. >> that is right. supervisor campos: i know you talked about sharing this information with these office of the d.a. and the city attorney. are you sharing any of this information with the homeowners that are impacted >> we have not sought them out. the problem is that they are no

longer homeowners. they are all people who lost their homes, which i think is a very sad state, and their records of that they have years later is fairly minimal, so what we wanted to do is really highlight these cases to make sure that this type of behavior is modified for the future. i wish we could have helped many of those folks in the past, but unfortunately, because we looked retroactively, there is very little. supervisor campos: and maybe if you can say a little more about what steps your office is taking to help those that were affected by this crisis? >> i believe we started around 2006 or 2007. we have been sending letters to all of the homeowners who are getting letters of defaults, so they know to call hide certified housing councils who do not make a single piece a profit off of their advice. we also started one or two years

later informing tenants based on what we could tell you where tenants of the same advocacy options so they could get assistance as well. i think part of that advocacy is a san francisco also faces more foreclosures and other surrounding counties. again, we still have way too many foreclosures than i am happy with. supervisor campos: and justifiable above the 2400 foreclosures, many of them are business as opposed to residential foreclosures. how many residential foreclosures are we looking at here in san francisco? >> i do not know that number, but we can find it for you. the large majority is going to be residential. supervisor campos: thank you. i will turn this over to supervisor avalos for the next portion, and wanted think you

and your group for what you have done, but as members of the board of supervisors, to do some additional work, i think it could be useful. if there are, indeed, civil violations of law, i think that we need to make sure that we take every step needed to look into that, and if there are criminal violations, then i think that we should expect that there would be a full prosecution, if that is the case. the reality is that laws are in place to protect the individuals, and if there is anything that is illegal or criminal in nature, i think the expectation would be that local law enforcement will pursue them aggressively, and so, to the extent that any additional information is needed, i certainly would be interested in submitting another request, another item to the board of supervisors, if there is

additional money that is needed, so that we give the assessor, recorder, this journey -- city attorney and the district attorney the tools they need to make sure that there is prosecution of any kind of illegal activity that may have happened, so i think that would be the next step, and i would wait and hear from the d.a.'s office and the city attorney's office to see exactly what might be needed to move in that direction, but i wanted to again thank you, and i look forward to continuing this investigation. supervisor mar: thank you. and thank you, supervisor campos. and let me just say before supervisor avalos takes in a way, he has already drafted legislation pertaining to this, which has most of the legislation that is before us.

also, there is the alliance of californians for community in power meant, ace, and there are some former members of acorn in case. there are some other groups that have been very active in this, and i want to knowledge supervisor:. -- supervisor cohen. supervisor cohen: i, like supervisor avalos, come to the table with experience in foreclosure myself. thank you for the data. i, like supervisor campos, look forward to this. i also want to take a moment to really think the san francisco housing development corp. and for as for their advocacy on this important issue. thank you. and to be fearless, defenders, i

do not know if we have any in the chamber, but i want to thank you for being courageous. [applause] for being courageous and really putting a name and a face on this issue as opposed to keeping the statistical data anonymous. it is important to personalize this not just for california but for people across america who are dealing with this crisis, and to the organizers, the california reinvestment coalition, as well as the city attorney's office right here that also helps to begin to rectify this. my only regret is we almost feel that we are so late coming to the table, but it is better late than never, so we will be able to prevent our children and our children's children from going through this crisis. and it -- i have a couple of questions for you, my friend. if you could come up for me? i am curious to know two things

about your data collection. first, i am wondering if you had a geographical breakdown of where the cases came from. i understand that they were randomly selected. >> as the other gentleman mentioned, we pulled more samples from the areas that were hardest hit, some areas in the red, there were more samples from the area because we thought it was fairly representative of what was happening in san francisco, and then there are yellow samples and the green samples. supervisor cohen: i understand. i know you are not clairvoyant. do you have a sense of the number of foreclosures that could have been prevented if the -- -- if the irregularities were discovered? >> what is interesting is, obviously, we do not know the situation. every foreclosure, meaning altman z what i believe that the people would say, there is no way you could forestall

foreclosures if someone is not paying, so we do not know if anybody was actually paying their loans on time, if they were foreclosed on in a manner that was not in accordance with the law. now, having said that, even if you do foreclose on somebody who is not paying their loans, but you are doing in a way that does not go into the law, that to be called into question. does that mean it would have been able to stay in their home? yes, but maybe it -- maybe only for a few more months. and it is a balance to be looked at. however, because this is a nonjudicial foreclosure states, it is so important that this process is followed because there is not a regulatory -- there is not a body that is making sure that the laws are being followed. it is almost a faith that the laws are being followed, and people are going through this process. as the report showed, in a large

majority of cases, that was not the case. supervisor cohen: thank you. i have some questions for some others. should i do that now or later? supervisor mar: i know that some are here, but i think it would be good to go forward now. supervisor cohen: another thing that often gets forgotten is that they will talk about taking them back and reclaiming their homes, but the flip side is that we have had some success with many of the homes in san francisco, so those that are fighting, i do not want you to give up. you are standing up and making a statement, and it is very important that you continue to do so, so i would like to ask the mayor's office on housing to come up. i just have a couple of questions for you.