Franklin County cases to be examined more deeply, paper trail followed.
by Carrie C. Causey
LOUISBURG — Accusations that area foreclosures have been unlawfully rubber-stamped have led officials to reconsider their procedures.
Recently appointed Clerk of Court Patricia Burnette Chastain was advised by legal counsel not to attend a meeting regarding alleged foreclosure fraud taking place in the county and nationwide. However, her office plans to take heed of concerns and handle foreclosure hearings differently in order to ensure each entity is being treated fairly and according to the law.
For years, Franklin County resident Mary Ella Hutchinson has been tracking local foreclosure cases and their hearings, finding discrepancies in documentation as well as procedure.
After watching what she considers to be residents having their homes stolen from them, she decided to do something about it. Hutchinson, along with a handful of other concerned residents, have joined forces to create a Foreclosure Task Force that helps homeowners make their case and lets them know their options.
The group has also worked to help educate officials, state representatives and others about their roles in due diligence and alert them about instances of fraud that have been uncovered nationwide. Until Chastain was appointed, Hutchinson’s efforts fell on deaf ears at the county’s clerk’s office, which approves all of the foreclosure hearings and has direct say on whether or not a foreclosure will proceed.
“I get worked up and passionate about this,” Hutchinson said. “If the courts don’t protect us who does? The clerks are the first order and the sheriff second.”
June 27, Hutchinson led a meeting in a small room in the Franklin County courthouse with a few of the people whose job it is to process area foreclosures, including Register of Deeds Brandi Davis and Sheriff Jerry Jones and First Sgt. Harry Upchurch, who serve the foreclosure notices.
The hearings for foreclosures, however, are under the direction of each county’s clerk of courts. In the days leading up to the meeting, Chastain agreed to delay a few of the scheduled foreclosure hearings to ensure they had time to go over the material Hutchinson had provided them. But the day before the meeting, she gave notice she wouldn’t be able to attend.
“I originally planned to attend, but the more I thought about the material being reviewed prior to the meeting, and not being sure what they were going to present, I decided to discuss it with legal counsel,” Chastain said of her absence. “I was advised that our office should not be involved — myself or anyone else — at a meeting that could potentially have ex parte communication or the appearance of ex parte communication.”
That means the clerk and her assistant, who handles foreclosure hearings, are considered the judges so she didn’t want it to appear she was being swayed by anyone who could wind up having a hearing there in the future.
The Administrative Office of the Courts, whose advice she sought, also reviewed Franklin County foreclosures from 1998 to the present and found no departure from statewide numbers to indicate any discrepancy to warrant further investigation, Chastain said.
“But we are taking a closer look at this,” she said of the alleged fraud.
Who is the true owner?
During her presentation, Hutchinson’s main point of contention was that those filing foreclosure against certain homeowners aren’t actually proving legal ownership of the deed. In essence, they are trying to take something away without proving that it is legally theirs. The first of the six guidelines for the clerk to check for is whether or not the entity filing foreclosure is the true holder of the note.
“If they can’t satisfy No. 1, then it’s game over,” Hutchinson said.
It is a common practice for mortgage notes to be sold, or passed on, to other companies. What can be lacking is a paper trail. In some instances, the notes are literally blank, offering no explanation as to which company has title over it.
In other instances, Hutchinson said, notes are being stamped and allegedly signed long after a company has gone out of business or the note has switched hands to another entity. The paperwork is being completed after the fact and fraudulently.
Hutchinson showed videos of other clerks who have audited their records and discovered “robosigners” — multiple varieties of signatures for the same person, clearly not done by the same person. In some instances, the person’s title for the company also changes from one form to the next.
“They are required to tell us who the note holder is,” Hutchinson said. “We have gotten copies from attorneys that are supposed to be the true copy but doesn’t have any endorsements. But the ones at the register of deeds have all of these endorsements.”
“You have to have a complete chain of title and have to show the money trail,” she added.
The problem shows a lack of a fair trial for the homeowner because of lack of due diligence, she insists. Plus, another company could come back and say they are the true holder of the note and foreclose on the property again.
Franklinton resident Norm Hunter has been personally affected by foreclosure fraud.
Hunter, whose foreclosure saga has previously been featured in The Franklin Weekly, has been under foreclosure for three and a half years. He had a construction loan and handcrafted his own home. When his wife was diagnosed with cancer, the $5,000 mortgage payment became too much.
Hunter has spent thousands of dollars trying to prove that the company overseeing his foreclosure doesn’t have true ownership. A copy of his note he received from his attorney is completely blank.
Yet, two years later, he was given another one by someone else filled with signatures from companies that had been out of business for years.
Since he began to fight his foreclosure, he said the bank has backed down and even sold his note again, though his property is still considered in foreclosure.
“In your capacity, you have the ability to step in and so does the clerk,” Hunter said during the meeting of how this ordeal could be prevented for others. “All you have to say is ‘Let’s look at it.’ [The clerk] can stop it right then and there. It just takes a couple of people and a little bit of pressure.”
More research, more time
Chastain said that under her watch, foreclosure proceedings may not go as quickly as they may have in the past.
She has asked to review all case material prior to each hearing. Plus, she plans to continue cases if they warrant additional research or information. She’s also reviewed all of the information Hutchinson provided as well as contacted other county clerks to see if they have received similar concerns and learn how they have handled them.
“From this point forward, we’re doing all we can to ensure that we follow the guidelines, question the details and take a deeper look at what things we can do to better serve the citizens and follow the law,” Chastain said.
“I want to make sure that for anyone foreclosed on, the agencies and institutions actually have power of sale,” she said, acknowledging Hutchison’s point about notes being sold without proper records.
“I inherited the concerns of the citizens with my position,” Chastain said. “The citizens of Franklin County come first, integrity of my office second and the law being followed.”