(Source: The Sacramento Bee)
SACRAMENTO, Calif. _ Kamal Sharma almost lost his house in a foreclosure auction the other day. The funny thing is: He doesn't even owe any money on it.
Sharma's story _ an extreme case even in Sacramento's chaotic real estate market _ shows that lenders continue to make foreclosure mistakes despite extensive publicity and promises to fix problems, which include sloppy paperwork and communication breakdowns.
"There are a lot of people that have been wrongly foreclosed upon," said Kevin Stein, associate director of the San Francisco-based California Reinvestment Coalition.
Sharma's troubles started last month when he arrived at his West Sacramento house one day to find a foreclosure notice from the servicing arm of Bank of America taped to the front door.
Sharma, 34, had paid $85,000 in cash for the three-bedroom home in March, using money from a settlement he received from a workplace accident in which he lost half of his left foot. He planned to rent the house out for income.
After the foreclosure notice arrived, other curious things happened. A potential buyer came snooping around the neighborhood, and then a property management firm refused to list the house as a rental due to the foreclosure notice.
Unable to reach Bank of America for answers, Sharma headed to West Sacramento City Hall on June 22, the day his house was scheduled for auction. That's when the bank abruptly called off the sale just as buyers were lining up.
Sharma still hasn't heard anything directly from Bank of America. But in response to a McClatchy Newspapers inquiry, the bank apologized and attributed the problem to a "data entry error" that restarted an old foreclosure action against the home's previous owner.
"I went through all of this mental stress," said Sharma. "I put my heart and soul into this house."
Each year, more than 500,000 foreclosures are filed in California. The volume has overwhelmed back-office operations and loan workout teams. Bank of America and other lenders likely will have to pay billions of dollars to settle an investigation by states attorneys general into "robo-signing," the practice of rubber-stamping foreclosures without actually reviewing homeowners' loan documents.
Prompted by regulatory investigations and congressional hearings, lenders say they've taken steps to clean up their practices. But consumer advocates say mistakes still regularly occur.
Earlier this year, the nonprofit California Reinvestment Coalition surveyed 55 foreclosure counselors around the state.