The mortgage and real estate industry's need for speed in processing property records may trump City Council's desire to prevent fraudulently filed deeds, city officials said yesterday.
Although people forge paperwork and acquire other people's deeds - stealing their property - in hundreds of cases each year, the city Records Department does not verify that the seller of a property owns it when recording a deed, Records Commissioner Joan Decker told Council.
That's because state law mandates that deeds be recorded "immediately," and a 1998 lawsuit by title companies, mortgage bankers, and real estate agents chastised the city for moving too slowly.
"We don't want to do anything in conflict with state law," Decker testified.
Flabbergasted by the state mandates - and Decker's reluctance to work around them - Council's Committee on Law and Government yesterday approved a bill that would require the department simply to match the seller's name on a new deed with the property owner of record on the old deed.
"It's ludicrous," said Councilman William Greenlee, the committee chair, who introduced the bill. "It's hard for me . . . to tell the public that someone can sell a property and there's not a check that someone's the real owner."
The bill could get a final vote next month, though Greenlee said he would continue to work with the Records Department on amendments.
Witnesses testified yesterday about how their properties had been stolen out from under them. What took seconds to record with forged documents in the Records Department took a year or longer to untangle in court, they said.
"To not have a home is hard," testified Doris Lynch, who moved to Florida in the midst of a messy divorce in 2002 and returned to the city five years later to find her East Birch Street home in someone else's name.
Thomas Henry Massaro, housing commissioner under Mayor William J. Green in the early 1980s, related how a man posed as his brother - while Massaro was in a coma - and gained title to his property.
Lisa Caulfield, chief of the Economic Crime Unit at the District Attorney's Office, called Greenlee's bill "a good first step," but recommended other safeguards, including stronger state laws regarding notaries.
A notarized document is all someone needs to steal a home in Philadelphia, and Caulfield and Decker urged stricter record-keeping requirements for notaries, including thumbprints of signatories, so investigators can follow evidence after the fact.
Decker's department has instituted a number of measures to combat fraud, including notifying a seller or borrower each time a deed or mortgage is recorded and photographing people who bring documents to record deeds.
But, Caulfield said, these policies don't prevent the deed from being filed. "The damage has already been done, and the crime is complete," she said.
Whether the mortgage and banking industry would tolerate any delays in processing deeds is unclear.
The Records Department once took a year, on average, to record and return deeds. As a result of a court order in the 1998 lawsuit, the department usually files a deed within three days, and returns it to the owner within two weeks, Decker said.
Kenneth Fleisher, a lawyer who teaches courses on fraudulent transfers for the Philadelphia Bar Association, said some banks wouldn't issue a loan unless the deed was filed within 24 hours because of claims on the title that can arise between issuing a mortgage and filing.
"The speed of recording documents is critical to any lender," Fleisher said.
Greenlee said the legislation should not slow the department much because the background check would affect only about 9,000 of the 60,000 deeds processed each year. Deeds filed by title companies, lawyers, or insurance companies would be excluded because those deeds have not been the source of forgeries, he said.