Crestwood Homes Collapse and the Tale of Real Estate Fraud

Although the following tale is from Idaho, it is akin to many seen throughout Michigan, some during my time with the Wayne County Prosecutor’s Office Deed Fraud and Mortgage Fraud unit. Bank Fraud, Mortgage Fraud, Deed Fraud, Short Sale Fraud. This story has it all. A get rich quick scheme that included falsified loan applications to secure construction loans during the Real Estate Boom time goes bust when the market collapsed. Most telling is the claim “This is not me”, by the Father that his fraudulent behavior is his regular character.  I beg to differ. It is easy to be generous, ethical and kind when all is going well. It is during the tough times that a person’s true character is revealed. Typically, the involved parties seek to retain what they had gained, protect what they have, and avoid any consequences. However, some actions, if deemed fraudulent have Consequences. Even though there is another bad actor in here, Nick Malis, who falsely claimed to be a Nevada Attorney, the scheme was clear that in the face of losing everything this family tried to fraudulently transfer its assets to avoid any collections by creditors. Michigan’s own Judge Hathaway learned the hard way that this is not the thing to do. Even though the Hymas family blames the first Bankruptcy attorney for not filing properly, an attorney can only work with what he is given and told. If that information or documentation is wrong, then the filing will be as well. I believe the judge was too lenient on these folks. Hopefully the lenders will file charges for Bank Fraud regarding the loan applications as well.

Shauntee Ferguson sobbed uncontrollably as she stood before a federal judge this month. The mother of five begged for mercy as the judge set her sentence for mortgage fraud.

Her father, Michael Hymas, sat in the courtroom, head hung low. He listened to the prosecutor and the judge chastise his daughter for letting him, and her husband, talk her into signing falsified loan applications. Just a few hours earlier, the same judge had sentenced Hymas to 21 months in federal prison. Next week, the judge will sentence Ferguson’s husband, Stanley.

One by one, over the course of 11 months, almost a dozen people have pleaded guilty or have been charged in federal court for their roles in a web of real estate schemes that made — and then lost — millions of dollars in the Treasure Valley’s housing boom and bust.

It has all the trappings of a Hollywood movie — assets hidden in shell companies, abandoned and unfinished homes, a beauty queen, a fatal plane crash and an appearance on a television reality show.

At the center of this complex story is the now defunct Crestwood custom home-building business, its young, ambitious owners and the close-knit group of family and friends around them.

The numbers are staggering: Between April and July 2008, Crestwood owners Aaron Hymas and Justin Walker and their family members and friends filed seven bankruptcies, collectively owing more than $85 million to more than 900 creditors. More than 100 civil cases have been filed in Idaho and Utah against Crestwood, Hymas and Walker.

The subsequent — and ongoing — federal investigation led to charges last year against eight Hymas family members or associates. All pleaded guilty.

Now, a second wave has begun. Last month, a federal grand jury indicted two more people, and additional indictments are expected in the coming months as the U.S. Attorney’s Office, Idaho Attorney General’s Office, FBI and federal bankruptcy and IRS investigators unravel a labyrinthine paper trail involving millions of dollars in real estate transactions and dozens of businesses and shell companies.

The two central figures, Aaron Hymas and Justin Walker, have not been charged with any crimes. One never will be: Walker died in a plane crash last year.

And while Aaron Hymas has no criminal charges, he recently was dealt a legal and financial blow. In September, a federal bankruptcy judge refused to discharge any of his debt.

PLANS FALL APART

During the real estate boom, many people in the Treasure Valley and across the nation were operating real estate Ponzi-like schemes that worked like this:

1) Obtain bank loans to purchase or build homes.

2) Quickly sell the homes for a profit.

3) Repay the bank and pocket the extra cash.

4) Repeat.

The system worked as long as the properties kept selling for more and more money — one property sale would pay off the loan coming due on another property.

“The market was out of control,” Michael Hymas’ attorney, Darren Meacham, told a federal judge at Hymas’ Nov. 1 sentencing.

“To call this fraud is misleading,” Meacham said. “In fact, this worked in the beginning. … Nobody thought they were going to get hurt. Nobody thought it would go down.”

But when the housing market cooled and the buyers went away, many were left owning numerous properties, with millions of dollars in bank loans and no financial ability to keep it all afloat.

QUICKLY CRUMBLING

In October 2007, the tanking economy forced dozens of buyers to walk away from pending Crestwood home sales, leaving Crestwood with more than a hundred unsold lots and homes. Aaron Hymas and Justin Walker consulted a bankruptcy attorney.

The same month, Hymas and Walker attended an “asset protection” seminar by Nick Malis, who presented himself as a Nevada attorney. Malis would tell them how “to own nothing but control everything” by creating holding companies that would own all of a person’s assets — in effect, making the person penniless and judgment-proof.

Malis’ advice so impressed Hymas that he hired him to create nine companies in Nevada on Dec. 4, 2007, to provide the “layers of protection” discussed at the seminar. On the same day, Walker created four similar Nevada companies. A few weeks later, Hymas unsuccessfully tried to contact Malis. “Aaron learned Malis was not an attorney ... and, in fact was in trouble with the law,” according to bankruptcy court documents.

The court documents detail what happened next:

Hymas hired another attorney, who determined Hymas’ nine Nevada entities were legal. Hymas and his wife, Tiffany, began liquidating investment accounts and transferring assets, their personal home and most of their household goods to the Nevada accounts and elsewhere. Dozens of asset and cash transfers occurred between December 2007 and April 2008, “at a time when Crestwood, Inc. ... was in its financial death spiral,” Assistant U.S. Trustee David Newman wrote.

Hymas said he had no intention of filing bankruptcy when he set up the Nevada accounts in December 2007, according to court documents. He said he did not consider filing bankruptcy until Bank of the West filed a $1.3 million lawsuit against him, Walker and Crestwood on Feb. 20, 2008. (On Feb. 21 and 22, the Hymases had transfered $325,000 from a personal account to their Nevada companies.) Hymas and Walker retained bankruptcy attorney Kelly Beeman on Feb. 28, 2008, but they would not file bankruptcy until almost two months later.

The Hymases loaned themselves $60,500 in March 2008 from one of their Nevada companies to pay for a surrogate mother and in vitro fertilization. Twin boys were born in January 2009.

Just days before filing bankruptcy, Hymas partnered with Vince Covino to buy 1,000 shares of stock in a financial planning company. For his shares, Hymas wrote a check for $220,000. About a year before filing bankruptcy, Hymas had loaned Covino $500,000, which was later converted into 49 percent of Covino’s company, Equity Benefits, which owned commercial real estate in Eagle and Phoenix.

On April 17, 2008, Bank of the West was awarded the $1.3 million judgment it sought. On the same day, the Hymases sold Tiffany’s wedding ring, watches and other jewelry to Aaron’s father for $13,000. One week later, on April 25, Aaron, 36, and Tiffany, 35, finally filed personal bankruptcy. The final document comprises several hundred pages, listing assets of just $64,000 and debt of a staggering $68 million.

For more than two years now, bankruptcy trustees have waded through myriad filings fraught with omissions and mistakes.

Aaron Hymas told the court their initial bankruptcy attorney, Kelly Beeman, is to blame for incomplete and missing information.

Beeman and Hymas refused to be interviewed by the Idaho Statesman. Other Hymas family members could not be reached, and Aaron Hymas said they didn’t want to talk.

Hymas brought on a new bankruptcy attorney, Brent T. Robinson, in October 2008.

Robinson did not return a call from the Idaho Statesman.

Robinson told the bankruptcy court this summer that his clients had received bad advice from Beeman.

“Once they realized that they were receiving bad advice from Mr. Beeman, they attempted to correct any mistakes, misinformation or omissions that were present,” Robinson wrote.

“Defendants have no defenses,” Assistant U.S. Trustee David Newman responded. “They cannot claim advice of counsel as defense or blame their misconduct on attorneys’ sloppy work.”

The judge agreed Beeman’s work may have been less than stellar.

“Beeman’s advice and conduct was patently wrong in numerous regards,” wrote Chief U.S. Bankruptcy Judge Terry L. Myers, noting that Beeman “was in many instances impeached by his own deposition testimony.”

But ultimately the responsibility lies with the Hymases, the judge said.

On Sept. 30, Myers denied the discharge of the Hymases’ $68 million debt because of “their transfer of assets within a year of filing bankruptcy with the intent to hinder, delay or defraud their creditors and their knowing and fraudulent false oaths,” Myers wrote.

The Hymases did not appeal the judge’s decision.

Even though none of their debt will be discharged, the bankruptcy case moves forward as the trustee attempts to recover and liquidate the couple’s assets to pay creditors.

On Sept. 17, the bankruptcy trustee filed a complaint against Covino seeking recovery of the $500,000 Hymas gave him. Covino is amicably working with the trustee to resolve the matter, according to his attorney, Brian Boyle.

A TRAGIC TURN

Justin and Jackie Walker filed bankruptcy the same day as the Hymases — just days after Jackie was crowned Mrs. Idaho 2008.

It was a busy time for this group. Within a few weeks, the company of Crestwood filed a $27.2 million bankruptcy and Hymas’ brother, sister and cousin all filed bankruptcy.

The Walkers’ filing, also lengthy, lists $168,000 in assets and $69 million in debt — much of the same debt the Hymases listed. Beeman also was their attorney. Their bankruptcy investigation also revealed Nevada companies, transferred assets and incomplete or missing bankruptcy information. As with the Hymases, the U.S. trustee had asked a bankruptcy judge to deny the discharge of any of the Walkers’ debt.

But it would never get that far.

On the morning of Aug. 1, 2009, Walker attended a bankruptcy auction of his personal items and unsuccessfully bid on his children’s snowmobile. After the auction, he went to the Caldwell airport, where he kept a tan-and-blue single-engine Gray RV-6. Except for a quick flight a week earlier, the plane had sat idle on the tarmac for almost a year.

Walker removed and sandblasted the spark plugs and cleaned the air filter. He then got in the cockpit and took off. He had gained just a couple of hundred feet in altitude when the engine began making a popping noise.

Walker attempted to turn around and land, but as the plane nosedived, it collided with power lines and burst into flames as it hit the ground near the runway. Walker, 35, was killed. He was the father of five children.

The FAA determined that pilot error caused the crash: Walker failed to maintain adequate air speed, causing the plane to stall.

ALL IN THE FAMILY

Between 2004 and 2006, Michael Hymas (Aaron’s father), his daughter, Shauntee, and his son-in-law, Stanley, pleaded guilty to falsifying $8 million in loan applications to purchase and flip 21 properties in Idaho and Utah.

“Ultimately, the scheme collapsed,” Assistant U.S. Attorney George Breitsameter told Judge Edward J. Lodge at Michael Hymas’ sentencing.

Hymas, 59, a longtime Meridian insurance agent, asked the judge for leniency.

“This is not me,” he told the judge. “My entire life I’ve taught my family about integrity. I put myself in a position where I … jeopardized my integrity. I didn’t mean to.”

Hymas wants to return to Utah and start making money so he can pay his restitution. He and his son, Aaron, have just started a new business venture called eNutriTec, a health food products company.

The elder Hymas’ attorney asked the judge to let his client go with probation or house arrest and restitution.

Lodge scoffed at the idea.

“Restitution is not a punishment … the money was never yours to begin with,” Lodge said.

This wasn’t just one mistake in need of restitution, Lodge said. Because Michael Hymas had filed bankruptcy a few years ago, he had to use his daughter and son-in-law’s names and credit ratings to get bank loans. Twenty-one of the 28 loan applications filed by the trio contained false information.

The “train wreck” was inevitable, Lodge said.

Lodge sentenced Michael Hymas to 21 months in federal prison, three years supervised release and 80 hours community service. He ordered him to pay restitution of $544,647.

Lodge was especially critical of how Hymas and his son-in-law used his daughter.

“Your daughter pretty much did what she was told,” Lodge said.

Shauntee Ferguson, 33, a stay-at-home mom, signed her name to loan applications and other documents prepared by her father or husband. Some documents indicated she made $10,000 a month as a marketing director at her father’s insurance agency, when in fact she was not employed and had no income.

“You cannot put your head in the sand and say you didn’t know what was going on here,” Lodge told her. “You just don’t sign documents unless you read them.”

Lodge sentenced Ferguson to one day in prison, five years of supervised release and restitution of $365,829.69.

“It is probably unfair to the victims, but it is the only sentence the court feels is realistic,” Lodge said.

Her husband, Stanley, will be sentenced on Nov. 29.

THE NEXT ROUND

Melody Covino Redondo, Vince Covino’s sister, slouched in her chair next to her husband, Paul, at the defendants’ table during their arraignment before a federal judge on Nov. 1 — coincidentally the same day as Michael and Shauntee Hymas’ sentencing.

Their indictment on multiple counts of bank fraud, wire fraud and making false statements to a financial institution marked another wave of charges brought by federal investigators and prosecutors.

The Redondos may be familiar faces to fans of “Fear Factor.” The couple appeared on a honeymoon episode of the television show in 2005.

In an alleged real estate scheme, Melody Redondo, a real estate agent, attempted to sell Crestwood subcontractor Christopher Georgeson’s $1.4 million Eagle home in a short-sale without notifying the bank of higher offers.

Under the scheme, the house would be simultaneously sold to another buyer and Redondo would get a share of the proceeds. When Redondo couldn’t get someone to notarize a quitclaim deed on which she had allegedly forged Georgeson’s name, Redondo became a notary and signed the deed herself, according to the indictment.

The simultaneous sale never took place.

Both Paul, 33, and Melody, 32, also are accused of falsifying income and other information on loan documents.

The Redondos pleaded not guilty at their Nov. 1 arraignment. A trial is set for Jan. 11.

Breitsameter said the FBI investigation continues and he expects to bring more cases to the grand jury in the coming months.

Original story By CYNTHIA SEWELL — cmsewell@idahostatesman.com

This story originally appeared on Nov. 21, 2010

The Importance of Consulting a Real Estate Attorney Before The Transfer of Property

This story comes from a recent trial. Very interesting case that involved some interesting facets of real estate law and provides a good example of why you should get legal advice prior to entering into any contract, real estate, or otherwise.

Briefly, the facts of my case are as follows:
Mom and Dad owned a large Farm. They had 3 children. One of the 3 children (“Bill”) operated the farm along with his wife (“Brenda”) for many years.
Mom and Dad added Bill as an owner to the farm with a deed as follows: “Mom and Dad and Bill, as Joint Tenants with Full Rights of Survivorship”
This “full right of survivorship” language means that when a joint tenant passes away, his or her interest passes to the remaining owner (as opposed to passing to the deceased’s heirs).
In my case, Bill died unexpectantly, predeceasing Mom and Dad.  Under the language of the deed, Bill’s interest did not pass to wife, Brenda, but simply reverted to Mom and Dad.
Thereafter, Mom and Dad executed another deed, this one adding Brenda as a joint tenant with full rights of survivorship.
Dad passed away. At that point Mom and Brenda were the legal owners of the farm.
years later, Mom, without Brendan’s knowledge or permission, in her old age, signed a quitclaim deed, deeding the entire property to her Trust.
Thereafter, mom passed away. One of the children brought suit against my client, Brenda. They claimed that the Property belonged to Bill’s siblings, not Brenda, since mom’s last deed put the property in her trust.
The legal question I was presented with was a simple one:
what is the effect of Mom’s later deed?

The Answer is: nothing.

It had zero legal effect.

Law: Distinction Between Tenants in Common and Joint Tenants with Full Rights of Survivorship

Under Michigan law, there are generally two ways to own real property – Tenants in Common and Joint Tenants with Full Rights of Survivorship. (A third way, not part of my discussion, but very interesting topic, being as husband and wife, or tenants by the entirety).
Tenants in Common
Holding property as Tenants in Common means that each owner holds the entire title along with the owners. . Each owner shares in possession of the entire property, and each is entitled to an undivided share of the whole. If an owner dies, his interest in the property is passed on two his heirs.
Joint Tenants with Full Rights of Survivorship
Conversely, in Joint Tenants with Full Rights of Survivorship, when an owner passes away, their “remainder interest in the property passes to the remaining owners. Simply put, the last joint owner to die takes the entire property.
Another way to characterize this  tenancy is: “joint tenancy with full rights of survivorship” is comprised of a joint life estate with dual contingent remainders. While the survivorship feature of the ordinary joint tenancy may be defeated by the act of a cotenant, the dual contingent remainders of the “joint tenancy with full rights of survivorship” are indestructible.”
This issue was made clear in the Michigan Supreme Court Decision of Albro v. Allen, 434 Mich. 271, 287, 454 N.W.2d 85, 93 (1990).
Put another way: “A cotenant’s contingent remainder cannot be destroyed by an act of the other cotenant.”
Mom’s actions to separate her interest were ineffective. The only interest she could separate was her “life estate” or her ability to jointly own and possess the property during her lifetime.  When she passed away, by law, the Property reverted to Brenda. Brenda owns the farm.

Lesson:
This is a case in point of why you get legal advice before entering real estate transactions.  Know the legal consequences of the deeds you decide to execute.  Michigan law is very clear – mistake as to the legal effects of of executing document will not undo the transaction.   See Schmalzriedt v Titsworth, 305 Mich 109, 114 (1943) “[i]t is elementary, of course, that a mistake as to law will not invalidate the act of a person who, at the time, was laboring under no mistake of fact, or who was not the victim of fraud, undue influence or other form of wrong-doing.” (Emphasis added).

This blog was shared as an educational tool from  http://jeshualaukalegalnews.wordpress.com/2013/05/02/lessons-from-trial-the-indestructible-deed-joint-tenants-with-full-rights-of-survivorship/

Anatomy of a Short Sale

INTRODUCTION:  

Recently in the local news, we have heard that a State of Michigan Supreme Court Justices is accused of Bank Fraud in relation to the short sale of a home that she and her husband owned in Gross Pointe Park.  Judge Hathaway and her husband allegedly transferred a property in Florida to her step-daughter before the short sale and then the property was transferred back into their names after the short sale.  A short sale is a voluntary modification of the contractual agreement between a short sale lender and the Borrower wherein the short sale lender agrees to accept less than the full amount of the debt in the case of a legitimate hardship by the Borrower. The author, having formerly worked with the Wayne County Prosecutor’s Office Deed Fraud and Mortgage Fraud Unit has seen many ways to commit bank fraud and fraudulent transfers and works with clients to avoid this trap when requesting a short sale on the client’s behalf.  It should be the goal of any short sale negotiator to zealously advocate for the client while protecting the client from claims of fraud and the negotiator from legal malpractice.

For some background, According to the Cornell law Website (http://www.law.cornell.edu/uscode/text/18/1344) , 18 USC section 1344 states:

”Whoever knowingly executes, or attempts to execute, a scheme or artifice—

(1) to defraud a financial institution; or

(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;

shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. “

M.C.L. 566.34-566.35, Michigan’s Uniform Fraudulent Transfer Act Statute, defines a transfer and when a transfer by a debtor would be considered to be with the intent to defraud a creditor. 

CLIENT PREPARATION:

When completing the client intake for a short sale, an attorney should require a complete and thorough disclosure of the client’s assets, liabilities, income, debts and the hardship reasons for a short sale.  This complete and thorough disclosure is necessary to best counsel the client on, not just the short sale, but when or how to avoid a Fraudulent Transfer or conveyance. Assets or property can legitimately be moved around within the confines of the law and the attorney and client should work together to come up with creative options based on the client’s situation and needs.

THE REQUEST FOR SHORT SALE:

The short sale lender typically asks for and requires a request for a short sale to include a full financial disclosure package of documents. Most request packages contain 1) the last two years’ tax returns; 2) the last two months paycheck stubs or proofs of income; 3) the last two months bank statements for all accounts; 4) a letter explaining hardship reason, and; 5) a monthly budget listing income and debts along with all assets and liabilities. However, other short sale lenders are more comprehensive and require the last 6 months bank statements and two year’s tax returns with all schedules.  The attorney must work closely with the client to determine where red flags may be raised regarding disclosure, how to avoid unnecessary disclosure, and still disclose what is required to avoid a claims of fraud or fraudulent conveyance.

NEGOTIATION:

The short sale lender and Borrower should have adequate, good faith disclosure in order to negotiate an agreeable solution while keeping in mind that the short sale lender is under no obligation to voluntarily modify the current debt obligation. The short sale lender assesses what they will accept based on what it determines to be an honest full disclosure by the Borrower.  Without full disclosure, the short sale lender retains the right to void the transaction and pursue any claims against the Borrower.  It is incumbent upon the attorney for the Borrower to give the requested disclosure as adequately and completely as necessary to avoid later claims.

CLOSING THE SHORT SALE TRANSACTION:

Not only is adequate, good faith disclosure necessary for negotiation, but it becomes mandatory during the actual closing of the short sale transaction. Documents presented for the Borrower’s signature at the short sale closing include affidavits that the Borrower has given full and accurate disclosure of financial information during both the request and negotiation process. The short sale lender also requires disclosure that there are no side agreements regarding the property. The reservation by the short sale lender of any and all rights to void the transaction and to pursue any and all legal claims against the Borrower, including claims of Fraud, is within those documents at closing.

CONCLUSION:  

A short sale negotiation can be a potential trap for the unwary short sale negotiator and the Borrower. Careful attention must be paid to disclose the information that is necessary, but protect the client where prudent and legitimately possible. An attorney negotiating a short sale should be clear with the Client as to potential claims of fraud or fraudulent transfer if full disclosure is not made.  Judge Hathaway’s situation should be a cautionary tale to any short sale negotiator to be zealous in negotiating but cautious in dealing with clients to ensure adequate good faith disclosure when requesting a short sale while avoiding any possible claims of malpractice.

Critique of Adam Leitman Bailey and Dov Treiman's article on MERS in ABA Probate & Property publication July/August 2012

   In a recent article (  http://www.americanbar.org/publications/probate_property_magazine_2012/2012/july_august_2012/bailey_treiman_moving_beyond_the_mistakes_of_mers_to_a_secure_and_profitable_national_title_system.html ) about MERS, the Mortgage Electronic Registration System, the authors, Adam Leitman Bailey and Dov Treiman make a set of assumptions that the current system of real estate title registration used throughout the US is broken or outdated and offer some suggestions for fixing it. Their premise is based on the recent failures that became apparent during the foreclosure process. I challenge their assumption that the current system is broken and that their suggestions are warranted.
   In the 1990's MERS was started as a short cut and a cost savings alternative for lenders and investors to the long accepted County Register of Deeds (ROD) systems that are set up all over the United States.  The authors state that the creators of MERS “intended it to simplify and centralize the tracking of rights regarding each mortgage-like instrument”. They fail to include that the system was also intended to avoid paying the filing fees required by public recording in the county ROD, which would, in turn, allow for cheaper and faster turnover of the securitized mortgages.
   The county systems are based on an open and public record of who owns "an interest" in real estate situated within that particular county. Those county systems are also uniquely keyed to the laws, especially those for foreclosure, of the State within which they reside. The authors admit that this local county system has been used since the 1600's. While this system is not without its faults, it has worked admirably for millions of documents for over 400 years. The system currently in place for centuries has been secure. Those who hold an interest in real estate who choose to avail themselves of the proper recording process are then afforded the protections of the State Law that comes along with it. 
    The contention that this system is "hopelessly behind the needs....of the 21st century" is a complete overstatement. Indeed, lenders and investors who make this argument come to it with unclean hands since the financial industry created the alleged need for instantaneous recording on such a massive scale through its securitization of mortgages. The loose lending of the early and mid- 2000's, predatory revolving refinancing, and lack of mortgage origination oversight contributed heavily to the increase in recordings at county offices and thus the reason counties fell behind in recording documents that were presented.  Shockingly enough, the authors state that in order "to sustain the kind of vibrant mortgage market seen during the housing boom, classical recording methods have to speed up...."  I am not sure why, or if, we would want to do that. We are all learning that the "vibrant mortgage market" that the authors extol was and is in reality a mortgage and real estate bubble based mostly on smoke and mirrors.
   Even after creating MERS “to simplify and centralize the tracking of rights” many users did not bother to update transfers and assignments within the MERS system which has led to more confusion of who owns what interests in real estate. The authors point out that MERS is a private system that does not share information publicly. They even contend that as a result of these errors and failings within MERS “the homeowner has no way of determining who actually has the superior right without resorting to the court system”, if a mortgage is simultaneously assigned to more than one financial institution. I see a problem here with a burden and expense shifted onto homeowners that they did not have to previously bear and should not have to bear now. The ROD recording systems were originally designed to further public policy that real estate interests be available and open to the general public to put people on notice of an interest in the property and who holds that interest. MERS is not a better replacement for this public policy need, but an obfuscation of it.
   Recognizing a need to have the public records available online and with the introduction of digital scanning, county ROD offices have not only been scanning and indexing new, incoming documents, but also scanning and indexing previously recorded documents going back decades. This is not an easy or instantaneous process. Time and money are needed to complete the process and money for County projects has been scarce in this economic downturn. The need to record deeds and mortgages is only one aspect of the slow recording problem for the authors' purposes. They seem to focus more heavily on the need to increase the speed of recording of mortgage assignments. To me, this need for speed appears to serve only the financial industry and those who securitize mortgages and is not a need of the general public. ROD offices are designed to and should serve the needs and interests of the general public.
    The authors state that there is a need for ease and efficiency in performing computer searches remotely. I agree. Local RODs are working on their systems to update records and bring them online. However, the authors touch on the possibility that increased access to digitized records would make forgery and fraud of public documents more prevalent. As a former member of a Deed Fraud and Mortgage Fraud Unit, I can say that scanning documents and making them available for the general public does not lead to an increase in fraud or forgery. Making the system national or private will not make it more secure either.
   States traditionally have had the purview of family law and real property law. The authors put forth that there should be National uniform systems for real property title registration and foreclosure processes. They concede that a National System would be over the horizon. But, each state has unique laws based on their own sovereignty that govern all real property rights within their jurisdictions that may be infringed by a National System. Many states would not like to make this drastic a change.
Furthermore, the authors suggest that foreclosure laws should be streamline for ease of global financial institutions to protect their rights. They claim it is difficult for financial institutions to keep track of 50 separate sets of state laws and procedures. They also claim that this difficulty would create more of a cost to customers if not changed. I do not agree. Lenders and Investors have always had to contend with 50 sets of state laws for mortgages and for other consumer debts. I have not heard a cry for a national consumer debt collection procedure from the financial industry.
   Besides, the states have created laws and procedures to protect the rights of all parties with an interest in real estate. The laws and procedures create a balance based on public policy between the owner and the lender. The owner is afforded protections, such as notice and a hearing and a timeframe to move out before losing possession and control of a home. The lender is afforded protections, such as an ability to gain possession and control of the property and possibly recoup any losses on the loan. Both are expected to follow the law and procedures to get the benefit and protection of the law and procedures. The recent “problems” with foreclosure laws appear to be self-inflicted by an industry that has tried to avoid the proper procedure. The proper party filing the proper paperwork in the proper timeframe at the proper place is the hallmark of a secured transaction. Without this, the party should not be allowed to avail itself if the benefits of the law and procedure nor should it be allowed to cry for changes in the rules.

In conclusion, the state systems of foreclosure and document recording may need updating to accommodate new technology, but they do not need to be overhauled for a particular industry user. The original purpose of registration of title for real property is to protect the rights of those persons with "an interest" in the property. It is not to be "profitable". Nor is it the responsibility of the ROD to create a less expensive system for those who have overused, abused, ignored, or overloaded the current system.