City to Urge Attorney General to Investigate Fraud in Housing

The city council will send a letter to Attorney General Kamala Harris, asking her office to work with the state legislature and courts to halt foreclosures by suspending California Government Code that requires sheriffs to serve all notices related to evictions.

The move was approved unanimously Monday night by all council members present at the meeting.

The letter argues that because of alleged deceptive trade practices by lenders, foreclosures in Petaluma, and elsewhere in California, should be temporarily stayed. This includes practices such as “robo-signing,” in which banks signed off on modification applications without fully reviewing them and because many banks don’t even hold the actual mortgages to the homes they are now trying to foreclose.

“There are a growing number of allegations of mortgage fraud,” states the letter, signed by Mayor David Glass. “We are concerned more people will lose their homes without having the ability to fight wrongful evictions.”

Currently, more than 400 Petaluma residents are facing foreclosures and homes are sold almost daily at local .

The letter also urges the Attorney General to file a lawsuit against banks on behalf of cities seeking restitution for the impact of the housing crisis on city budgets. According to estimates, Petaluma has lost more than $800,000 in property tax revenues since 2007 and $200,000 in property transfer taxes.

See a draft of the letter in the attachments on the right

The letter was the brain child of Occupy Petaluma, which has made foreclosures one of their focal points. At Monday's meeting, several members read a letter to the council urging it to send the letter to Sacramento.

"The wheels of justice may spin slowly, but the sickness of a system that continues to dispossess families of home and hearth must be stopped now," said Amy Hanks, a member of Occupy Petaluma, in a prepared statement. "The mortgage crisis is no less than a cancer eating away at the heart of the American economy and the American dream. Our local and national economies are bleeding through the gaping wounds of empty, foreclosed homes. We can’t save the patients if we don’t stop the bleed!"

Do you think a lawsuit against banks by the Attorney General would recoop money cities have lost as a result of the housing crisis?