S.R. NO.













directing the attorney general of the state of hawaii to investigate cases where fraudulent transfers and assignments of mortgage loan documents are alleged.



     WHEREAS, Hawaii has been experiencing a mortgage crisis since 2004; and


     WHEREAS, the mortgage crisis resulted from a number of problems in the housing market, including an increase in non-traditional mortgages such as risky subprime loans, inflated appraisals, systematic abandonment of underwriting practices by lenders, and unstable risk-management practices; and


     WHEREAS, foreclosures of people's homes have resulted in vacant homes, homelessness, and declining property values and neighborhoods; and


     WHEREAS, mortgage defaults led to a record number of foreclosures across the nation and in Hawaii; and


     WHEREAS, from 2006 through 2009, there were more than 6 million foreclosures nationwide as compared to only 100,000 foreclosures in 2005; and


     WHEREAS, the national rate for foreclosures has increased an additional 23 percent since 2008, with approximately 2.9 million home mortgages in the United States in foreclosure in 2010; and


     WHEREAS, according to the Year-End 2010 Foreclosure Market Report, there were a total of 3,825,637 foreclosure filings, including default notices, scheduled auctions, and bank repossessions; and


     WHEREAS, the rate of foreclosure for 2011 and 2012 was predicted to exceed the foreclosure rate of 2010, and the 2011 foreclosure filings have overwhelmed the courts and lenders; and


     WHEREAS, the ongoing housing crisis and significant increase in mortgage delinquencies and foreclosures have exacerbated the current financial crisis; and


     WHEREAS, according to the Federal Bureau of Investigation, mortgage fraud is a growing criminal threat that is hurting homeowners, businesses, and the national economy; and


     WHEREAS, investigations by the Federal Bureau of Investigation and other law enforcement entities, including state attorney generals, have focused on fraud related to loan origination, mortgage loan securitization, and mortgage servicing; and


     WHEREAS, in the fall of 2010, nationwide reports exposed fraudulent foreclosure filings, which included the practice of signing mortgage documents without first verifying the contents, a practice often referred to as "robo-signing"; and


     WHEREAS, there are now alleged cases of fraudulent assignments of mortgage, affidavits of foreclosure, and transfers of title, including instances of fraudulent signatures; and


     WHEREAS, securities fraud lawsuits have been filed on behalf of the beneficiaries of state pension funds, including a class action lawsuit against Merril Lynch, now owned by Bank of America, for providing misleading documents for $16,500,000 in certificates; and


     WHEREAS, banks are required to register with recordation offices in each state and pay certain fees for each sale or resale of a mortgage; and


     WHEREAS, many banks utilized the Mortgage Electronic Registration Systems electronic mortgage registry, which permitted these financial institutions to repeatedly avoid paying local fees and taxes; and


     WHEREAS, local communities lost local tax revenue through banks' fraudulent behavior and local counties are now suing to reclaim the significant amount of lost revenue; and


     WHEREAS, it appears many loan transfers, assignments of mortgage, and quitclaim deeds may have been fraudulent and their filing statuses inaccurate due to illegal loan transfers and lack of recordation at the state level; and


     WHEREAS, fraudulent documents filed by lenders and the failure to follow securities procedures have clouded property title in Hawaii and damaged borrowers and subsequent purchasers; and


     WHEREAS, nonjudicial foreclosures do not allow homeowners the opportunity to challenge these fraudulent loan documents; now, therefore,


     BE IT RESOLVED by the Senate of the Twenty-sixth Legislature of the State of Hawaii, Regular Session of 2012, that the Attorney General of the State of Hawaii is directed to investigate instances where homeowners allege fraudulent mortgage documents, assignments of mortgage, or title transfers, and to take action so that any financial settlement reached with mortgage servicers appropriately compensates for, and accurately reflects, the extent of the negative impact on all the victims of the fraud, including homeowners and the State; and


     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor, Attorney General, and Director of Commerce and Consumer Affairs.









Report Title: 

Fraudulent Mortgage Documents, Assignments of Mortgage, and Title Transfers