Sunday, Oct. 23, 2011
County planning high-tech system to combat mortgage fraud
By Chad Selweski
Macomb Daily Staff Writer
Macomb County could emerge as the first community in the nation to employ high-tech protections against widespread mortgage fraud that was uncovered earlier this year, under a new project by county Clerk Carmella Sabaugh.
Sabaugh will create a Google search tool on her website that will make it easy for homeowners to conduct searches of multimillion-image databases to ensure they are not the victim of con men who seek to fraudulently claim property ownership, or a second mortgage or a lien against a property.
Perhaps more importantly, this "super index" will protect against the rash of mortgage fraud detected earlier this year in which banks try to foreclose on properties without possessing the proper legal documents.
"We have millions of records on hand here, but with this system, a property owner can put their name in, pull up their documents and see what ones are there," Sabaugh said. "This will pull up everything based on a person's name. It's easier, more efficient and … it provides peace of mind."
The project, which carries a $330,000 price tag, was approved by the county Board of Commissioners on Thursday. It's believed that it will be the first fraud protection system of its kind in the United States.
The clerk's office was inspired to pursue a super index, in part, by a CBS News "60 Minutes" report earlier this year that found banks across the nation had engaged in blatant forgeries of phony documents in order to pursue home foreclosures.
When the housing market was hot, the lenders quickly bundled mortgages into "exotic" financial products to be sold on Wall Street. The resulting sloppiness resulted in huge numbers of legal documents missing for property transactions.
In response, the banks allegedly created "signature sweat shops" where workers earning $10 an hour — some of whom were high school students — signed up to 4,000 pages of phony documents daily. These document mills forged the names of fictional bank officials, as some of the nation's largest lenders tried to recreate the missing notarized documents.
In Macomb County, officials say the current system of filing and indexing property deeds and other documentation is difficult to access — by design. The title companies, real estate agents and real estate attorneys maintain a closed system that is largely accessible only to them.
The Google search that Sabaugh favors will allow searches for millions of pieces of property data, with results produced in seconds. Initially, those searches will only go back to 2005, but the computer capabilities could later be expanded.
The super index is made possible by new, practical technology called a Google Search Appliance. This computer hardware, which officials say "looks like a block of cheese," permits efficient searches through millions of images while maintaining the privacy and security of the documents.
Each online search by the public could involve a $5 fee plus $1 to print a document.
The Macomb project will be financed by a special Clerk's Office fund that consists of approximately $1.6 million in fees paid by the public each year to record real estate documents.