Sheriff Tom Dart is in a showdown with banks over foreclosures.
As sheriff of Cook County, Ill., which includes the city of Chicago and is by far the state’s most populous metropolitan area, Dart is in charge of seizing delinquent borrowers’ homes — or, more accurately, of enforcing the law. Indeed, he’s refusing to complete foreclosures unless lenders Bank of America (BAC), JPMorgan Chase (JPM) and Ally Financial provide affidavits attesting that the foreclosures are legal. Said Dart in a statement on Tuesday:
I can’t possibly be expected to evict people from their homes when the banks themselves can’t say for sure everything was done properly. I need some kind of assurance that we aren’t evicting families based on fraudulent behavior by the banks. Until that happens, I can’t in good conscience keep carrying out evictions involving these banks.
Draw, pardner. Dart’s moratorium immediately affects 500 court-approved eviction orders and could delay another 300. He plans to extend the ban to any other lender found to have “robo-signed” or otherwise mishandled foreclosure documents.
There’s one thing you should know about Dart — he’s running for office. The sheriff is expected to be Rahm Emanuel’s chief rival in the forthcoming mayoral race in Chicago. Still, Dart has intervened in such disputes before. He also refused to execute foreclosures in 2008 after discovering that banks had failed to notify renters that the property they were living in was being seized. Cook County subsequently adopted rules requiring lenders to prove that tenants have been properly notified before a foreclosure can proceed.
Besides, even if Dart’s motives aren’t completely pure (hey, nobody’s perfect), it’s heartening to see someone hold banks at their word before strewing a person’s belongings all over the sidewalk.
BofA insisted no one has been wrongly kicked out of their homes in announcing earlier this week that it would resume foreclosures in 23 states, including Illinois. Some homeowners would dispute that contention.
For instance, an Indiana family accused the banking giant of racketeering in suing the company this week in federal court on grounds that it illegally seized their home. In September, an Arizona couple, Henry and Sharon Newman, sued BofA on allegations that the company threatened to foreclose on their home — despite the Newmans not having a loan with the bank.
In light of such complaints, let alone the broader revelations about systemic flaws in the foreclosure process, law enforcement officials like Dart and the state AGs investigating the affair have no choice but to get tough with banks. As Dart said:
With banks changing hands two or three times and mortgages constantly being purchased by different lenders, we just don’t know how vast this problem is. What I do know is that there is a cloud over every one of their foreclosure filings.
For financial firms, Dart’s actions show just how messy — and political — things could get. Whatever cover federal officials give banks to ramrod foreclosures through the legal system, this fight will largely play out at the local level. That’s a dynamic neither Washington nor Wall Street can control.
- Repossessions increase by 15 percent
- Villages being affected by bank closures
- California bank to take advantage of Small Business Jobs Act
- Big Banks Stringent about Granting Loans to Small Businesses
- Lenders cut fixed rate mortgage rates