The City and County of San Francisco retained Aequitas, an audit firm, to review residential mortgage loans that resulted in 2009-2011 foreclosure sales. The Aequitas report begins with a short primer on California residential lending and foreclosure law, explaining that California's statutory foreclosure process used by most lenders is a non-judicial process with very little oversight. Alarmingly, Aequitas reports:
Overall, we identified one or more irregularities in 99% of the subject loans. In 84% of the loans, we identified what appear to be one or more clear violations of law.
The report goes onto detail the particular types of irregularities and their respective frequencies (full report). The report concludes:
… with so many homes being foreclosed and with so little oversight, California’s foreclosure process appears utterly broken…. California’s real estate laws were designed to address a far simpler, much different market…. California’s hoary statutory foreclosure process is complicated by outmoded assumptions and problematic ambiguities. It is in the best interest of all—the mortgage industry, securities investors, homeowners and communities—to modernize California’s real estate laws so that these issues are more effectively addressed.