Friday, February 23, 2007

Foreclosures swamp staff

Flood of cases and new software put city office in a hole

Hundreds of foreclosures in Denver are on hold because of a massive backlog in the Clerk and Recorder's Office, putting lenders in a "precarious position" and forcing the city to hire more help.

On Wednesday, 661 foreclosure packets, which are supposed to be recorded within 10 days, were more than two weeks past due, according to an internal report obtained by the Rocky Mountain News.

The problem is so bad that employees are working weekends to catch up and fielding urgent pleas from law firms handling foreclosures.

"I'm desperate!" starts off one e-mail to the clerk and recorder. "I have a (Department of Housing and Urban Development) title package that has to be sent out tomorrow."
Interim Clerk and Recorder Stephanie O'Malley said she inherited the problem when she was appointed to the post Jan. 9 by Mayor John Hickenlooper.

"The only thing I could do was say, 'I need to get more people in here to help move this process along,' and that is what I've done," she said.

The city's Career Service Authority is in the process of hiring the three on-call employees that she has requested, she said.

O'Malley, who is running for the seat in May, said there are two factors contributing to the backlog.

First, foreclosures in Denver have tripled since 2002.
The other factor delaying Denver foreclosures points to former Clerk and Recorder Wayne Vaden, who resigned in the wake of the disastrous Nov. 7 election.

While in office, Vaden approved the purchase of a $143,500 software program that requires employees to manually transfer data from about 2,500 older but active foreclosures into the new system.

"My staff has been held captive in having to migrate data physically from that old system to the new system and be attentive to new packets," O'Malley said. "It is a lot of work."
The program is designed to make the processing of foreclosures more efficient. That should happen once employees get caught up, O'Malley said.

Vaden, who negotiated a $150- an-hour consulting contract with the city two months after his resignation, did not return a message left on his cell phone.

In addition to inputting data from older files, employees at the Clerk and Recorder's Office said the new software also requires them to type in more information on new foreclosures.
They also said that Vaden never asked for their advice.

Rhonda Stewart, a deputy public trustee, said it used to take 10 minutes to process a foreclosure.

With the new software, it now takes about 30 minutes, she said.
"We're doing a lot of work, but we're not stressing out," Stewart said. "You can't stress out about it. You have to stay focused."

Metro-area law firms that handle foreclosures and do business with the city either declined to comment or did not return calls.

But in e-mails obtained by the Rocky, it is clear the backlog has put them under pressure.
"I know HUD could refuse title if we don't get it to them," states another e-mail.
HUD requires that all documentation, including the original or certified copy of a deed, be submitted within 45 days of the request for deed recording.

O'Malley said the backlog "doesn't bode well for the community."
"When you just have these properties sitting there dormant, from a community standpoint, that's not a good thing," she said.

The delay also hurts business.

"If you have a piece of property out there that's (on hold), the lender is put in precarious position because now they're sitting on a piece of property of which they're not getting any revenues," O'Malley said.

"There's no payment on the mortgage," she said.
"And so their goal, of course, is to move the property so that they can get a return on their investment."

Source :
or 303-954-5099
By Daniel J. Chacon, Rocky Mountain News February 22, 2007

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