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Foreclosure surge demands probe
Sunday, December 03, 2006
Neighboring Montgomery County already has surpassed its old record for annual home mortgage foreclosures filings. Setting a record was an annual event for many years, as filings more than tripled from 1,319 in 1997 to 4,281 in 2003.
The grim statistic leveled off at around 4,000, but then started to rise again this year. With six weeks remaining, the 2006 tally has reached 4,385. Total foreclosure filings during the past 10 years now exceed 31,000.
Extras
The numbers may not be as high in Butler County, but the trend — a 355 percent increase in the number of home foreclosures over 10 years — is alarming. In 1995, 447 home foreclosures were recorded; in 2005, the number had increased to 2,032.
In neighboring Warren County, which has enjoyed a housing boom similar to Butler County's, the story is similar but the rate of increase — 738 percent — topped the list of counties in southwestern Ohio. Warren County went from having 112 home foreclosures in 1995 to 938 in 2005.
Borrowers did not lose their homes in all cases, and some may be repeat filings for the same property. But the cumulative numbers are staggering.
Cuyahoga County has experienced a similar explosion, with its foreclosure filings growing from 18,818 in 1996 to 63,996 in 2005 — the highest rate per capita of any county in the state (Montgomery County was second), according to Ohio Supreme Court data organized by Policy Matters Ohio. Filings in Franklin County rose almost as rapidly during this period, increasing from 2,116 to 6,596.
And state officials have done too little to expose what's behind the epidemic — or to hold anybody accountable.
Such has been the case under Gov. Bob Taft, and his anemic Commerce Department. Betty Montgomery and then Jim Petro talked a good game as attorney general, but they haven't used the full power of their offices to go after scam artists.
Every couple of years some scandal would break in which a large mortgage lender would be charged with engaging in a national scheme to systematically cheat consumers. But, every time, state and federal regulators have allowed the wrong-doers to buy their way out of trouble.
Large fines have been levied, but no one has been criminally charged.
High-profile executives haven't lost their jobs. Few regulatory reforms have been enacted. In fact, investigative files typically have been kept under seal, while offending companies continue in business without missing a beat.
Meanwhile, injured consumers have received pennies on the dollar for their losses.
Incoming Gov. Ted
Strickland and Attorney General Marc Dann need to get to the bottom of Ohio's foreclosure epidemic — and launch regulatory and criminal — yes, criminal — investigations into mortgage lending practices that have contributed to the skyrocketing foreclosure rate.
For starters, Mr. Strickland needs to clean house at the Department of Commerce and appoint a director willing to use the agency's broad regulatory power over state banks, finance companies and mortgage brokers to protect the public and to provide a detailed accounting of why so many Ohio mortgages are in default.
Mr. Dann will have unprecedented power to go after predatory lenders and brokers when he takes office as attorney general — thanks to Senate Bill 185, a strong pro-consumer bill that passed the legislature after a five-year fight and only after it was beyond dispute that mortgage foreclosures had reached crisis proportion.
But the sweeping protections only apply to transactions that occur after the law takes effect in January. Where does that leave the legion of consumers who were casualties of unscrupulous deals predating the new law?
Mr. Dann shouldn't ignore this long neglected and still unfinished business.
As attorney general, he will chair Ohio's Organized Crime Investigations Commission — a bipartisan group of law enforcement officials who supervise a high-powered team of federal and state prosecutors and investigators.
The commission's purpose is to investigate complex criminal enterprises that operate across county lines — including white-collar financial fraud that county prosecutors offices are not well equipped to tackle.
Predatory mortgage lending operations can constitute just such a criminal enterprise. Schemes that target unsophisticated consumers and extract premium fees for worthless products and dishonest services can amount to fraud or theft. Financial institutions that aid or abet such conduct may cross the line and become co-conspirators.
These issues need to be sorted out as part of a systematic investigation that makes use of grand jury subpoena power. The process should start with consumer advocates throughout the state developing a uniform method for summarizing and submitting information on their predatory lending cases from their bulging file drawers to the Ohio Organized Crime Investigations Commission.
Then the investigators should go where the evidence leads them. Ohio families that have lost their homes — and local communities that have been devastated by predatory mortgage lenders — have waited too long for justice.
