I can't identify them because they haven't happened yet, but if you look at what's happened in Pittsburgh --
Then how do you know they should happen? 78 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
Well, if you look at Pittsburgh, for example, they did happen.
We can't look at Pittsburgh as an example because Pittsburgh is not Philadelphia.
Pittsburgh is not Philadelphia, but I just -- if you look at the private sector --
I'll end here. In your testimony you also say that these elected positions are not accountable to the Mayor and City Council, which is not true, because the Mayor and City Council has budget authority. The Mayor and City Council can in fact set an appropriation level for these functions that reduces it by the amount of the salary and benefits of those elected officials. We could set 79 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 the budget level where we want. And so the Mayor and City Council does in fact have control over the issue of cost savings and efficiencies by setting an appropriation level for the departments.
Well, it's certainly true that Council does have the budgetary reins and can ask questions, but they do --
Yes, but, again -- and, again, I do not mean to be disrespectful here, but I have been to the budget hearings for the row offices for the last two years, and I would not characterize those as really looking very deeply into the budget.
So what more budget authority would we have if they were not elected positions? We would have the same budget authority we have now.
What would I 80 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 suggest you do?
No. I said we would have exactly the same budget authority whether they're elected positions or not elected positions.
At the end of the day, the Mayor and City Council, if the issue is actually cost savings and efficiencies, can set the appropriation level wherever we want.
But I think the issue is that I believe that the holders of the row offices operate relatively on their own. I think that they, in some cases, the Register of Wills, they --
The question is whether this is political or whether it's actually a fiscal issue. If it's a fiscal issue -- and let's discuss it as a fiscal issue. If it's a fiscal issue, then the issue is whether the Mayor and Council already have the authority to set the appropriation level as we see fit and 81 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 where we see appropriate in terms of cost savings and efficiencies.
Yes, you do have that authority, but I do not believe having gone through -- sat here through the last two budget hearings that those were the kind of questions that were asked. I did not hear any of those being asked.
Okay. If, for example -- as I said in the testimony, before City Council was scheduled to consider the proposed budget this year for the Clerk of Quarter Sessions, we wrote a letter to City Council urging 82 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 them to halt fundings until it was clear that the savings were identified and a credible plan was in place for improving the services that were formerly handled by the Clerk staff.
I'm talking about the future. Give me an example of what would happen under your plan.
Perhaps if there were a plan for how the employees were going to be used, maybe all the employees would not have transferred over to the --
I'm asking about the future under your plan what you envision would be different.
For the Clerk of 83 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Quarter Sessions? I'm not within the court system. I don't know what kind of efficiencies could be realized, but I believe that Mr. Gillison and --
So you're assuming that the President Judge would come in and ask for more money or less money under your plan?
She might. I think if there -- I mean, people don't tend to ask for less money, but I believe if there were a --
So I'm trying to figure out how your plan changes anything in terms of cost savings and efficiencies.
Because I think if the funding had been withheld with the idea that you --
Things 84 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 change as you want them to change. We have Fiscal Year '12 budget. Things you want to happen in the Clerk of Quarter Sessions happen in terms of abolishment, transfer of duties and responsibilities. What changes in terms of the budget process?
Well, maybe as you come up to the budget process this coming year, you'll have an opportunity to talk to the First Judicial District about the efficiencies that have occurred, the cost savings that have occurred from the absorption of the transfer of the former Clerk of Quarter Sessions employees.
And the First Judicial District is not independently elected as well?
What changed is that the Clerk of Quarter Sessions, assuming this bill passes, will not be an 85 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 independently elected office.
I'm just asking the process by which you achieve savings and efficiencies and how that relates to the budget process and what changes under your plan. There doesn't really seem to be a real answer for that, which is why I pulled out the part of your testimony where it says a springboard for taking a hard look with an eye toward, which doesn't sound like a lot of due diligence has been done, and I think I've proven that by this exchange today. Thank you, Mr. Chairman.
Thank you, Councilman. Any other questions, comments? (No response.)
Seeing none, thank you. Anybody else to testify on this bill regarding the Quarter Sessions Court? 86 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 (No response.)
Seeing none, Ms. Marconi, could you please read the title of the other bill that we are considering today. We finally got to it.
100487, an ordinance amending Chapter 2-200 of The Philadelphia Code, entitled "Recording of Deeds," by modifying the requirements for the recording of deeds, providing for certain fees and making certain technical changes, all under certain terms and conditions.
Thank you. I think we know what this bill 18 is about. We've visited this issue. I'd just like to make a quick statement. Mr. Grosik, if you could come to the witness stand, you'll be our first witness. (Witness approached witness table.)
First, I 87 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 would like to acknowledge Records Commissioner Decker for implementing some policies to protect homeowners under the law that we passed back in 2008, which I sponsored. Unfortunately, those reforms have not gone far enough and unsuspecting homeowners are still having their homes stolen, because a significant number of fraudulent deeds are still being recorded. Hundreds, if not more, have had their homes stolen because of these filings. The time and costs for these people -- and I think this is the most important thing -- who have had their homes stolen to get them back is mind boggling. It costs thousands of dollars and can take over a year to get what should never have been taken from you to start with. The most logical approach, what this bill takes, is not to allow the deeds to be filed. And I know we're going to hear issues about state law, but 88 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 other counties have figured their way around this and we need to figure something out too, because this is just ridiculous that we keep -- that this keeps happening. And at some point, I'm going to talk about another county who seems to have figured it out, but I want to get into the testimony, and I've asked -- I'm going to kind of reverse what we do a lot. I'm going to have Steven Grosik, who is a prime example of why we need this bill. Mr. Grosik, if you could identify yourself for the record and then just as briefly as you can, because we have a lot of testimony, kind of just go over what your problem has been over the last year. I know my office has been real involved with you, just so we give a sort of framework of this thing. And just for the record, the next testimony will come from the District Attorney's Office and if Dina Schlossberg is here, from her. 89 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 So Mr. Grosik.
Hello. My name is Steven Grosik. I'm here because I'm a victim of property theft. It all started around October of 2009. I was notified by the City that the deed to my property was changed. It was a big surprise, of course. So I contacted them, and they gave me a copy of the deed. I came over here for it. And the first thing I see is that my property was taken without even using my name. They used the previous property owner, who I bought the property from, on my deed, which is a real big mistake. The notary seal on the deed also was expired at the time that they did it, and then the person who actually took my property, which is a person named Anthony Mitchell, he uses a non-existent contact address on the deed also. So it's been very frustrating just trying to correct these mistakes that are just so obvious that -- it's 90 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 been frustrating. And I contacted some lawyers, and they told me it would cost anywhere from $5,000 to $10,000 to take on my particular case. And right now I'm still in the process of trying to get the action to quiet title, which already has cost me $343 just to file it, and I'm already almost a year into this and it's still not finished.
And I think one of the things I want to note, that Mr. Grosik has a little bit more wherewithal than maybe some other people to be able to try to find their way through this mass, and it's still taken over a year for something that was as simple as checking to see that the latest deed was not in the name of the man who supposedly sold it; am I right? Is that basically it?
So a simple check to see that that was not the case could have saved you a whole lot of 91 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 time and money.
Extremely so, yes. I was so surprised when -- to find out that they took my property without even using my name, that's not even close to being right.
It seems that way to me. Any questions or comments from members of the Committee? (No response.)
Thank you. I mean, I wanted you to come up here first. Again, for the record, I could parade and Councilwoman Sanchez who is here, who is the co-sponsor of this latest bill, I know could parade a lot of people up here today. We don't want to take up the Council's time and the Committee's time, but I just wanted to give one example of what this is all about and why we need to do something. And also I want for the record to note that Councilman Green, a member 92 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 of this Committee, is also here. Also just to put on the record -- and I don't want to go back to the last bill. As Councilman Goode said, Allegheny County is different from Philadelphia County, but in this case I'm going to use an example to show how Allegheny County has gotten somewhat creative in trying to figure out why fraudulent deeds should not be filed. And I won't read the whole letter. It's on Allegheny County's letterhead, Dan Onorato, Chief Executive. It's signed by Valerie Roberts, Deputy Manager. I'll just read this one paragraph, which I think is key. "The goal of certification of deeds" -- this is from Allegheny County -- was to," in caps, "INSURE ACCURATE PROPERTY RECORDS for the county database and title search purposes. In other words, good deeds were recorded on the front end and not rejected in the back end after recording, for faults on the deed. We have no more recording of 93 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 bad deeds." Now, that sounds real simple, and Allegheny County, the second largest county in the state, has figured it out. And it seems like Philadelphia has worked real hard in trying to find out why we can't do it, and we'll hear from some other testimony to, I think, back that case up and why we can do it. Are there any other questions or comments for Mr. Grosik? (No response.)
I appreciate your time. I know you had to sit here and listen to stuff that probably didn't pertain to you, but I appreciate the time in you coming down and the tenacity you've shown in trying to get something that should have been never taken from you from the get-go.
Thanks for your help for all this, too. Hopefully you guys will be able to write some rules that this won't happen to anybody else in 94 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Philadelphia.
We're trying, and I hope we get cooperation from the other branch of government, sir.
Thank you. Lisa Caulfield or whoever else is here from the District Attorney's Office, and if Ms. Schlossberg is here too, maybe she can come up also. I didn't see you over there, Dina, if you could come up, too. (Witnesses approached witness table.)
Hi. Good morning. Identify yourself for the record and proceed, Ms. Caulfield, please.
Good morning, Councilman Greenlee, members of the Law and Government Committee. My name is Lisa Caulfield. I'm currently the Chief of the Economic Crime Unit over at the 95 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Philadelphia DA's Office. I've been a prosecutor for years and I've been 4 prosecuting solely economic crimes for 5 the last seven. I'm here on behalf of 6 District Attorney Seth Williams, and we 7 at the office very much appreciate the 8 opportunity to discuss with you the 9 problems associated with house stealing 10 or fraudulent conveyancing. 11 We're very appreciative of your 12 efforts to help protect victims from 13 these fraudulent conveyances. At its 14 core, the issue is about protecting 15 victims from criminals who have no regard for those -- for the houses they steal or for those for which they sell stolen houses. It is incumbent on us together to identify ways to alleviate this problem, and we are incredibly pleased that you, Councilman Greenlee, Councilman Sanchez and others, have been working diligently on behalf of victims in Philadelphia. We support your efforts to 96 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 attempt to institute change. We can look toward our colleagues in Allegheny County who have put into place requirements that deeds can be rejected if the name of the grantor and the grantee does not match. So what we're trying to accomplish is to replicate common sense best practices in place in other jurisdictions. What is important is that deeds where the names do not match are not recorded. Now, granted, there are many situations where the forged deed victim, it takes place where there's not an issue of names not matching. It's simply a forgery of the name that does match. In fact, consideration should be given to putting the burden on the party who is coming into the Department of Records with the name that doesn't match to straighten that matter out. I'm not here to discuss what the Department of Records can and cannot do given the current legal restrictions, but I will discuss the impact of change, 97 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 if they're permitted to do so, on investigating and potentially preventing fraudulent conveyances. Gentlemen and Councilwoman Sanchez, rather than read my entire testimony verbatim, especially given, for the most part, a lot of it is known to Council and was testified to previously in 2008 when we first reviewed this ordinance, if permitted by you, I'd like to somewhat summarize.
Please. We'd prefer that. By the way, I appreciate all that you have done in this field. You've worked very hard on this.
My pleasure. Thank you very much. It's important to know how the forged deed problem takes place, and as it was five years ago, it's still very similar. The individual who is planning on stealing a property from someone and forging a deed targets certain properties. They can do that either 98 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 physically, visually by driving around the neighborhood and looking for something that appears abandoned or vacant. They have friends out in the neighborhoods who can refer them to other houses, and they do their homework. They go and they check back taxes, back water bills, and if something piles up, that's a key target to fall subject to a forged deed. Coincidentally, it's also a key target for a house that could get put up for sheriff's sale. So there are two separate entities that are looking at the same type of houses. The individuals then either conspire with a notary or use a notary or, as I discuss at the very end of my testimony, in the recent past we're seeing the role of the notary as not even an issue anymore. They can go to a notary with someone posing as an owner. They can go to a notary and pretend they have a friend who is owner. They can ask for favors. The notary themselves could 99 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 be completely complicit and just sign off, or as we're seeing more and more, the notaries themselves are being victimized. Their stamps are being counterfeited, their notary stamp and seal is being cut and pasted from legitimate deeds or documents onto an illegitimate deed. Once that deed is recorded, we have our first victim, and then that individual can then go on to sell that property to someone else, where we have a second victim, which we call a buyer victim. Most of these victims, both owner victims and buyer victims, are very unsophisticated in the world of real estate. You'll see very little instance of title insurance or even an inquiry at a local real estate office or a title insurance company. We're not talking about a settlement table. Often these transactions take place on the street. As law enforcement, our biggest burdens and -- hurdles, rather, is to 100 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 identify the parties to this. And we go to the notary in a legitimate situation and we go to the Department of Records to help us form our evidence so that we can continue to investigate and prosecute these individuals. The Commissioner's office, as yourself, Councilman Greenlee, has already suggested, has taken a great many measures, and I am confident from my working relationship with the Commissioner herself, that if given the leeway to, she would institute even more measures to try and prevent and assist law enforcement with this. We have the notification letter. The notification letter goes out, and often that is what precipitates a victim from calling the police or my office. Unfortunately, the notification records don't always make it to the true owner. They'll either go to a house where the true owner no longer lives or that person is deceased. They could go to the house at issue, in which case the 101 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 perpetrator might get the letter. And, I mean, ideally, if it were permitted and a deed could be put on hold, that notification letter going out first would save a great deal, not only name match issues but all of the individuals who have had their names forged.
And, Ms. Caulfield, if I can just interrupt for one second, I think the key, though, what you said is that when that letter goes out, by that deed already being filed, the things have -- the bad stuff has already started spinning.
Once the deed is recorded, the damage is done and it can never be removed.
And that means you guys have to get involved or might have to get involved. If that deed was not recorded, you guys could save a lot of time and deal with other things, right, because it would never get to that point? 102 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
I would agree with that. And one other thing as well, I mean, even also prior to even recording the actual piece of paper, an individual could have been victimized, because as they're out on the street exchanging money and drawing up a document, the money is already gone. So if that deed even was not recorded, that person could take off, and the money would still be gone. But, yes, to a definite extent, that would save the problem. The other safeguards that have been instituted are the taking of photographs, the sign-in log, the copying of the photo ID's. All of that is essential to identifying people. There are a few steps that would be helpful along the way. The Commonwealth strongly supports the concept of having the actual grantee on the deed come in in a walk-in situation and record that deed themselves. At this point, anybody can walk in off the street 103 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 with no relation to the property or the parties involved and record the deed, using whatever type of identification that may be fraudulent. If the actual grantee was required to record that deed and then provide identification, sign the log, the number of possible suspects would be diminished extraordinarily. One other suggestion on the transfer tax certifications, for the most part, we do see them filled in completely. However, the parties are able to hide upon duplicate information on the transfer tax. You'll also see the grantor name, which of course is usually a forgery, and the address of the house at issue. You'll see the buyer, whether they be an innocent victim buyer or a perpetrator, using that same exact information. The leads go nowhere from that point. And then, of course, we talked about the notaries at length. If we could do something about the notaries 104 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 that are complicit -- and, again, we're seeing a situation where notaries themselves are being more and more victimized -- that would stop this from happening even before anybody walks in to City Hall and tries to record it. If the notaries had more requirements on them to cause them to stay out of the situation and feel that it is too much trouble for them to get involved with, then it would stop right away. So I thank you again for reading the testimony and listening to my few verbal comments. We're happy to continue to work with the Task Force, locally, statewide, everything we can do to try and help changes in this situation.
Thank you, Ms. Caulfield. And, again, thanks. I know the District Attorney's Office has become even more aggressive in going after these perpetrators, and I think that certainly has helped and sent the 105 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 message. And I also agree -- and I think you've said it a couple times -- that in the perfect world, if the State Legislature could pass some laws that would make it easier for everybody, we'd appreciate that. And I know Representative Manderino for a while was picking it up. I understand Representative Kenyatta Johnson wants to try to pick this up. But I know trying to get stuff through here is tough enough. Get up there, I know is very difficult. I mean, my opinion is, we can't wait. We have to try to do what -- we have to do what we have to do in the interim, like we've done on other problems that has been up here and like Allegheny County and a couple other counties have done. But, again, I appreciate everything you and the District Attorney's Office have done. Any questions or comments?
Thank you. 106 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
Yes. Thank you very much. I wanted to know -- and I appreciate Councilman Greenlee's comments that this DA is much more interested in pursuing these. I wanted to know, what additional resources, if any, the DA's Office is focused in so that we can prosecute what we've known for a long time to be some folks who are consistently -- have been consistently stealing some of these deeds? And in particular, this is because of my situation, where we are with the Robert Coyle situation, where we're talking about hundreds of properties. If there's anything that you can report at this point.
Well, I can say at the outset I can't discuss anything that's an open investigation. In terms 107 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 of resources, we do not have any additional resources. In fact, the budget situation has reduced my unit in the recent past.
Six before? That's an important piece for us to know, because we're always debating budgets and priorities, and this is an important matter to us and I want to make sure that the Committee is aware of it and I'm aware of it so as we enter another budget discussion, we talk about this. This is, as Councilman Greenlee, who has been leading this charge for a long time, for many people this is their only valuable asset, and the fact that we have allowed hundreds and hundreds of these cases to happen, we have to take some responsibility in 108 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 helping correct them.
Thank you, Councilwoman. I'm glad you brought up the whole economic thing, because obviously cost of things are important everywhere. Is there any way to estimate -- I know you probably can't do it off the top of your head, but if you could get it -- like how much in manpower and time and eventually money that has been spent dealing with fraudulent deed issues and stolen property issues?
I don't think I would be able to estimate that at all. I can tell you that these cases are unbelievably time consuming. The case that resulted in successful convictions early this year was the result of an investigation that took approximately four years. It started out with a number 109 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 of parties. It grew and it grew. We took it in front of the grand jury. The grand jury testimony took close to a year. We brought returns on 6 individuals. Fourteen of those 15 7 individuals have been successfully 8 prosecuted. There were at least 82 9 properties involved in that one case. 10 The number of victims would have been 11 probably somewhere between 130 and 160 12 given that there are often two victims 13 for a property. That trial took six 14 weeks of this Commonwealth's time and all 15 of those jurors. My desk right now is covered in deeds, approximately 75 houses worth, encompassing different investigations, and those of my five DA's have similar-looking desks.
And I would dare say that Allegheny County, since they implemented their thing, maybe their DA's don't have to be as busy on that. I can't prove that for the record, 110 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 but I could take an intelligent guess.
That I don't know, sir. I'm born and raised in Philadelphia.
That was a comment, not a question. All right. Again, thank you. Any other questions? Councilwoman Sanchez.
What is the number of cases that you currently have?
The number of cases I -- I don't have a number of that. I'm just thinking about my own desk and certain --
No, no, no; 75 houses probably make up the piles that are sitting on my desk right now.
Okay. We'll have to ask CLS and then we'll do the addition. 111 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
Just for the record, I think when Ms. Caulfield alludes to two victims per house, I think a lot of people understand, oftentimes these thieves then sell the house to an unsuspecting person, so you have two. And we've been in court many times, and oftentimes the court -- and maybe this is the best they can do -- basically says to the two victims, Work it out, guys. And that's a tough thing to put on people. And, again, I'm a broken record, but we never should have to get to that point. Okay. Thank you.
Ms. Schlossberg, please. And then after her, Mr. Seward of HAPCO, and then the folks from VIP and CLS will be after that. Good morning, Ms. Schlossberg. I think it's still morning. Just about.
Good morning. My name is Dina Schlossberg and I am an attorney with High Swartz, which is 112 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 located in Norristown. I want to thank Councilman Greenlee and Councilwoman Sanchez and the other members of the Committee on Law and Government for allowing me to testify today. My background is both as an attorney, as a law professor, as a former Legal Services attorney and as an active member who has done pro bono cases on quiet title and other kinds of pro bono cases, and I have an active practice here in the City of Philadelphia. I have seen firsthand how financially challenging and emotionally gut-wrenching it is for clients to have to unravel a fraudulent conveyance case. And I too am not going to read my testimony, but I do want to give you one brief example that actually ties in with our first testifier's case, because we have the same fraudulent fraudulator, as Stefanie Seldin and I used to call them. So let me just give you one quick example. I had represented a woman 113 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 who wished -- she wanted to acquire the vacant lot next to her house. The house had been vacant for almost years. It 5 wasn't quite ready for adverse 6 possession, but close enough. She had 7 taken care of this property for years. 8 The property came up and was 9 recognized and she saw that it was on the 10 sheriff's sale list, and she started to 11 investigate it. It turned out that the 12 property had been owned by a couple. 13 They died, respectively, in 1981. The 14 man, his name was Cleo -- I mean Grant, 15 and his wife, Cleo, died in 1988. 16 The property was never properly 17 probated. And I want to say that 18 fraudulent conveyance cases are made more 19 complicated -- they complicate the 20 already complicated tangled title cases that we have that are rampant as well in the City of Philadelphia. When you have a fraudulent conveyance on top of a case that wasn't properly probated or that is what we call a case that's going to end 114 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 up with a tangled title outcome, it just makes it more likely that a pro bono attorney is going to look at it and say it's too much work or it's going to exacerbate an already complicated matter. So in my case, we had property owners who had died in '81 and '88. In '88, the property was never properly probated, and the property was really not under the active control or direction of anyone, and as the woman from the District Attorney's Office just said, the perps know when the properties are sort of not under anybody's care. This property fell victim to a fraud, and in 2006, a deed was recorded with the Philadelphia Recorder of Deeds purporting to show that Grant Madison, who died in 1981, and Cleo Madison, who died in 1988, sold the property to a man named Hye Young. This was years after 23 the death of Grant and 17 years after the 24 death of Cleo. My client decided to undertake 115 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 this case and to unravel all of the mess that came with it so that she could get -- she could have bought the property at sheriff's sale and she chose not to. She said she wanted to find who the rightful heirs were, untangle the tangled title and have the property reverted to the parties who had the rightful heirs to the property and then acquire it from them. As we were going through some of those procedures, the property was flipped again. The person who bought it in 2006 was a guy by the name of Hye Young. The person who bought it in 2009 was the same Anthony Mitchell who went after Mr. Grosik's house. And actually Mr. Grosik had contacted our office, and we've talked to many people now who have been victims of Mr. Mitchell.
In the end, we filed a quiet title action on behalf -- in the end, we were able to have the decedent, the heirs of the people who had died, Grant and 116 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Cleo, established as the administrator of the estate. We filed a quiet title action on their behalf, and in 2010, just about two or three months ago, we had the quiet title action satisfied in the name of the Estate of Cleo Madison. The entire procedure took 9 months. If I showed you the court 10 records, you would see, I don't know, 11 three or four separate independent 12 actions, 14 different motions. We had to 13 hire private investigators to find this 14 Hye Young, who doesn't even exist, and it cost my client upward of $20,000 in legal fees. And I have to tell you that she was sort of getting kind of -- I mean, she started calling me, to be frank, on Sundays saying, I can no longer afford this, this is getting out of control. And we comped probably $10,000 worth of time, because we were in it, we wanted her to get the property back. And it was quite a joyous day on the day that the administrator of the estate received back 117 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 the property and then sold it to my client, and for a legitimate price.
It was well over months. Well over 14 months. 8 And if you saw the deed from Hye Young 9 when he acquired the property, the 10 signatures of the now dead people were 11 signatures of looked like teenage girls. 12 No matter how you looked at it, you would 13 notice that the deed from the time Grant 14 and Cleo bought the property in 1976, they were already -- they weren't kids. If you looked at the signatures alone, you would indicate that they were not grown-ups. The signature alone made it look like it was fraudulent. I think that my client had some resources and had some ability to pay for this kind of action. Most people do not have the resources to pay for this kind of action. So I'm here to say that I 118 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 support the bill and I support any action that the Committee can take and City Council can take to slow down the bad guys from being able to record these deeds. You'll see in my written testimony that my concern was over the fee that was going to be assigned here for people who are buying properties when there was no title insurance. I see that fee has been removed, so I want to thank the Committee as well, Councilman Greenlee and Councilwoman Sanchez, for recognizing that that might have had a punitive effect on certain people. So I want to just give you a couple comments that I think might be helpful. I understand why you'd want the grantee to come in. The grantee is often the bad guy, and they could -- if they're going to lie on paper, they're going to lie in person. I don't know if that will satisfy anything. Perhaps it will slow down the bad guys, but they can bring in 119 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 false ID.
I guess the short answer to that is, we're at least trying to put an obstacle here.
And there's a few who don't have the guts to come in, so if we cut a little bit of that down, we're trying to --
You're trying to slow it down. My concern, there really are legitimate circumstances when grantees are buying property and they're not going to be local, and I'm afraid of the effect on the City by asking people to do something that almost isn't done in most other counties. You'll have to kind of weigh that balance about whether that's a good thing or a bad thing. I would hate to see the City get sort of the same bad flack over this as they got over the blogging tax.
I think 120 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 we have a better argument on that.
You have a much better argument than the blogging tax. One idea might be is, some people are suggesting that you should have the grantor come in. I think that that's a challenge, because once the grants are signed, the deed -- again, if it's legitimate, it doesn't really have a lot of incentive. But one might be to require if there's no title insurance, lawyer, et cetera, that you have to produce photo ID of both parties. Again, that doesn't stop a fraudulent conveyance, but it certainly helps the purchaser -- sorry; certainly helps the legitimate property owner if there in fact has been a conveyance that's fraudulent to be able to confirm that in fact was not them. So you have to show a picture of who the purchaser and the seller might be and record that with the deed. I mean, in my case, for instance, 121 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 this elusive Hye Young who acquired the property, we never located him. I mean, he then sold the property to Anthony Mitchell. But we, after months of 6 hiring private investigators, posting, we 7 had to go back three times to get 8 service -- rights to service of process 9 other than by paper. We could never 10 locate him. His addresses were all 11 fraudulent. If we had to have at least a 12 photo ID, maybe we would have -- I don't 13 know what we would have had, but I think 14 it could have helped. I did have one other comment. I think that's it. So I think the bill itself is very helpful. I think if you can get a certification that is legitimate. And I really applaud also the notice that would go to grantees when they acquire a property if there's in fact no title insurance. And I will say that I think that most of the title insurance agent world is very legal and authentic and 122 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 legitimate. It's not necessarily 100 percent of a way to cure the problem.
I certainly agree. And, look, any law we pass probably doesn't catch everything, but I think clearly now there is way too many that are going through, so at least we're trying to deal with what we can in a reasonable manner. And you mentioned slowing down the process. I think that's why we have in here to exclude from a lot of these regulations ones that do come through title insurance -- and we're going to add the word "title agent," I think, because I understand that might have been a problem -- and income through real estate firms and lawyers, because we found that that's not the predominant amount of problem. Could there be a crook there somewhere? Sure. But we found most of it is in this one-on-one stuff, and that's why we're concentrating on that and that's why we're pretty confident, despite some of the concerns 123 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 raised, that it will not slow the process down very much, because you're not talking about the majority of these things, but you're talking about trying to attack the problem, where the problem exists. And I think that's what we're trying to do. And, again, there's no perfect solution to this. That's why the DA exists, because people break the law, but if we can cut it down a little bit or I think, in my opinion, significantly, if we could get the cooperation, I think it would have a tremendous effect on people.
One other party who you might want to try to get as a cooperator in all this process is Linebarger's office, because, as you know, the City of Philadelphia sold a lot of their liens to Linebarger's. And then our experience, when the property was -- particularly in this case, when the property was in sheriff's sale, there was no negotiating. We would say, Wait a 124 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 minute, this was a fraudulent conveyance, do you understand that this was flipped now twice. You take this to sheriff's sale, the funds that are going to be -- if there's any overture after what's due to Linebarger, who is going to get those funds? It can't be the family who is legitimate heirs to the property, because the property wasn't properly probated. It's going to go to these bad guys or to nobody. And they wouldn't -- they didn't really want to play. They didn't want to help cooperate.
It's not just the Sheriff's Office, but it's Linebarger, who owns a whole lot of these liens.
I wanted to add in terms of the insult to injury 125 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 in that, the other thing that we're adding is to have a letter go out to the address of the property if it's different from the grantee and the grantor, because in the case of the Robert Coyle situation, what we found is people have purchase agreements, the houses were being sold and flipped and flipped, and the people who thought they were buying the house were not notified. So that language is being added on here. And just to your point, because we have a particular case that we're aware of where the property went to sheriff's sale, the Sheriff's Office was notified that it was a fraudulent deed, they sold the property, and then our Law Department proceeded to pay the person who sold the property's bills off on the lien, even though both the Sheriff's Office and the Law Department knew that it was illegally transferred. So it gets worse; it doesn't get better.
And I know we 126 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 have to proceed, but in my client's case, we ended up paying the back taxes for 2006 to 2009 when they were owned by a fraudulent owner.
No, no. 7 In this particular case that I'm speaking to, that was the case. The person who sold the property's bad bills, their bills were paid and not the victim's bills, and the City and the Sheriff's Office were aware of it, and now the City is trying to say, Well, it's too bad, you got to take the rest, whatever is left.
There's a million stories. But thank you very much for the opportunity to testify.
Thank you, Ms. Schlossberg. Thank you for all you do in helping people in these matters. I appreciate it.
Thank you. 127 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
Thank you. Mr. Seward from HAPCO, please. And after that, it will be Stefanie Seldin and George Gould. We'll get through this eventually, guys. (Witnesses approached witness table.)
Good morning. It's 11:59. We got you in in the morning, too. Could you identify yourself for the record and proceed, please.
Good morning, Mr. Councilman. I'm Victor H. Pinckney, Sr. I'm the President of HAPCO. I didn't think I was going to have time to make it, but I was able to get here today. I'd like to thank you, Councilwoman Sanchez and the Law and Government Committee, for allowing us to speak, and I'd like to also say thank you to Councilwoman Sanchez. I was at the conference you 128 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 were at yesterday, and you're one of the few people who really understand what is necessary for dealing with blighted property. I'll turn it over to Mr. Seward.
My name is Willie Seward, Vice-President of HAPCO. Privately I've been a real estate broker for more than 40 years, so what we're talking about here --
You'll end up hearing me disagree with some of the points. Not with this bill per se, but some of the things will be a little different. HAPCO, the Homeowners Association of Philadelphia, for the ones that don't know who HAPCO is, represents several thousand Philadelphia property owners, primarily low- and moderate-income residential homes. 129 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Members of HAPCO deal regularly in the transfer of real estate and the recording of deeds. While this Committee is aware that HAPCO always seeks to streamline City processes and not create overly burdensome bureaucracy filing requirements, we appear today to express our support for this Bill 100487. While the Committee is aware that HAPCO always seeks to streamline City process -- I'm sorry. The incidence of fraudulent recorded deeds has become overwhelming, and HAPCO is appreciative that Councilmembers Greenlee and Sanchez have obviously recognized the problems and proposed corrective action. Both as legal counsel to HAPCO and as an attorney in private practice, Mr. Zaslow has been involved in a number of court cases where innocent owners of properties found that some unauthorized person has recorded a fraudulent deed. 130 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 The legal expense to unravel the fraud is significant, and the many months lost in court proceedings is truly burdensome. The forgery of signatures has been aided and abetted by unscrupulous notary public. Inquiries to the appropriate department of the Commonwealth of Pennsylvania as to the discipline of a notary produces uniformly disappointing results. The action of the notaries is failing to either properly ascertain the true identity of the signatory to a legal document or their participation directly in fraud should be subject of further review. We, of course, are aware that the District Attorney's Office is involved in these matters, and we would encourage a further examination of the role in this fraudulent activity by the notaries involved. The proposal in Bill 100487 to subject deeds to a higher level of security when the title insurance has not 131 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 been obtained may contribute toward solving the fraud from which the City is suffering. We should note, however, that in many cases where the would-be perpetrator of a fraud ascertains that a house appears to be abandoned often due to the death of the owner without interested heirs, meaning that the heirs are not interested, they care less and that's it. The mere appearance of the buyer at the Recorder of Deeds and his acknowledgment that he has not obtained title insurance may not be sufficient. In such a case when there is no title insurance to truly solve the problem, it may in fact be necessary for the seller or a duly authorized representative to appear at the Recorder's Office with proper identification. We would be remiss if we did not draw to the attention of the Committee our concern over the very expensive price tag for recording of 132 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 deeds in the City of Philadelphia. The surrounding counties, for example. However, again, HAPCO again thanks the members of Council for undertaking the legislation and letting us appear here. I want to look at this bill, and it's something that we -- that you have here in the recording, and that is No. 4.
This is what you propose. "Any deed presented for recording, where title insurance has not been obtained insuring the marketability of the title to the real estate identified therein, shall be presented to the Department, in person, by the grantee named in such deed." I want everybody to think about 133 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 something. The grantee is the crook. The grantor or representatives of the grantor should be the one that appear. The grantee has prepared his proper papers. He's already probably signed the deed forge. He done everything. So what we would like to see, if not both, we do believe that the grantor is the person that should show up, because legally that property before it's disturbed is in the grantor's name that it is original and true. Let a representative of that owner be the first one to be there to transfer the deed. As I said, I want you to think about it, and we believe we are right. I will say personally over 40 years, I know I'm right. The grantee is the crook. He is the one that want that property in somebody's name that is not correct.
Well, again, I understand what you're saying and as we had discussed with Ms. Schlossberg, I think one of the 134 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 reasons we have the grantee in there is because we're trying to cut down on some of the people coming in there, that some of them, if they have to come in person -- before they could just send it through the mail and it was easier to be a crook, if you will. So we were trying to, again, put these obstacles. I understand about the grantor. I guess we'd have to think as, again, Ms. Schlossberg said, the grantor oftentimes once they sign the thing there, I don't know how much we can force them to come in.
Every grantor I know, if he want to sell his property, this is the law. If he want to sell his property, he will come down City Hall. Although it could be a legitimate deal naturally, you know, but we're talking about protecting the one that's not in the --
I understand. I agree, it's something to 135 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 think about. I understand. Any other -- and I just want to add, when you say about HAPCO always seeks to streamline City processes, I would argue in the long run we are streamlining this, because we're taking out all these people that then have to go through that whole court procedure and all. So for, I think, a small amount of time for maybe a group of people, we're saving a subgroup of that people a tremendous amount of time. So I don't think we're really even creating in any way an overly burdensome process, and that's why we took out, as I say before, the title insurance companies, the lawyers, the real estate firms, because, again, we didn't find that they would be the problem. Councilman Green, you had a question?
Okay. Councilman Green. 136 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
Thank you, Mr. Chairman. I'm just curious as to what you thought of Ms. Schlossberg's idea, which I thought was a decent one, which was requiring a state-authorized picture ID, even if the person coming in with it that has the picture of a person and the name, a copy of that be brought and that could be filed with the property record so that you'd have some identification, like a license, for both the grantor and grantee, if you thought that would help.
Let me answer this. I feel it's a good idea, but I would say both parties, the parties there, their picture ID, not to bringing somebody else's, actually their picture ID, even if the parties could -- what I'm looking for is that they'll send someone. At least you have -- they send an innocent party, say, Do me this favor. But at least you have a trail.
Right. And 137 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 I think the purpose of the grantee going just to -- and I understand what you're saying about the grantor completely. The purpose of the grantee going is that it is usually that person committing the crime. That person has to have their state-authorized ID with them, and there are cameras there. We've got them. And that should be a major deterrent that doesn't exist today.
You're going to take photos of all individuals that come in, you said, or what?
Yeah. They do that now, yes. They do that now. But, again, they still file the deed even if there's a problem. We're back to that again.
I think they are checking them now. I think the issue is going back, and I think VIP will have an example of checking that with the 138 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 actual ownership. So people can have an ID, but they're not checking it.
Right. Got you. And, by the way, you're right, notaries or the fraudulent notaries are a big problem here. As much as I'd like to regulate them too, that's clearly the state, so I'm not going to go crazy today and try to do something I know we can't do. But you're absolutely right, and I understand that that is an issue that is being looked into in Harrisburg and they're going through the process up there. But I agree with you, notaries are a big issue in this whole matter.
I think -- and, again, it will be up to the Committee. I mean, my desire today -- we have some amendments to do already -- is to get the bill out of Committee, and certainly we can have more conversation. 139 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 If we think there's a couple more things to add, we certainly can do that in the interim before we bring the bill before the whole Committee. So we'll certainly take your opinions and suggestions into note. Okay?
Ms. Seldin and Mr. Gould, please. And I remind everybody we have another committee hearing at o'clock, so as much as we can get through this as quickly as possible, I'd appreciate it. And I think you both know we have offered some amendments to deal with your concerns. 140 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 (Witnesses approached witness table.)
Very good. Please identify yourself for the record and proceed.
Good afternoon. My name is Stefanie Fleischer Seldin and I'm the Managing Attorney at Philadelphia VIP.
And my name is George Gould. I'm the Managing Attorney for Housing and Energy at Community Legal Services.
Philadelphia VIP provides free legal services to the poor through pro bono attorneys. First, I'd like to start off by thanking Councilman Greenlee and Councilwoman Quinones-Sanchez for the opportunity to meet with George and myself to go over some suggested changes, and, of course, we are grateful that you accepted most of 141 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 our changes, especially the removal of the fees, which would have imposed a large burden on our very low-income clients. And I want to thank the Committee in general for drawing attention to this very serious problem that we have. I will be quick. I recognize that I'm standing between you and your lunch, but I did want to --
But I would be remiss in not thanking Council for their support of VIP in general and in particular for our work in tangled title and the tangled title fund, which pays filing fees, taxes and other fees that are not waivable that our clients face, and that I'm going to speak about those clients a little bit today. Councilwoman Sanchez alluded to the client that I will call Mary Jane, a fraudster, recorded a deed not from Mary 142 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Jane but from Jane Mary to an innocent third party. Yes, the fraudster completely reversed the first and last names and yet this deed was still accepted for recording. Of course now, there are two victims, right? We've got Mary Jane and the innocent third-party purchaser. And Mary Jane will now have to go and seek legal services, if not through -- if they're not free, Dina Schlossberg already told you how quite expensive it will be for her to hire an attorney. This Friday, Ed Hayes, who is here today to testify and whose an extraordinary VIP volunteer, will spend two hours explaining to potential volunteers the quiet title process, and then VIP will provide them with a 60-page training manual and a 200-page appendix. So this is not easy to be undone, it is not easy to understand, and it's not easy to recruit volunteers. And we would be ever so grateful not to recruit as many 143 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 volunteers, and I think this bill will go a long way towards doing that. I want to applaud Council for including the waiver of the $200 recording fee for victims of fraudulent conveyance, and I also encourage Council to reach out to President Judge Dembe about the $360 quiet title complaint fee that is also quite expensive, because despite your efforts today, some frauds will clearly slip through and people will be filing those fees. I just want to take a minute to mention what happens to the innocent third-party purchaser, if it isn't obvious. They lose all of their money. And it's concern for this third party, which I believe was motivation behind requiring of title insurance or a signed waiver. And I think this waiver is really important, and I understand that there are issues of preemption and I hope that whatever happens, that this waiver form will be instituted by the 144 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Commissioner, because it explains the risk of purchasing a property without title insurance or legal counsel and directs them to free legal services, which I think is critical. So even if a fraud does occur, the consumer is at least informed right away and can take action. Once this bill becomes law, VIP looks forward to working on the exact language of this waiver with Commissioner Joan Decker, who has truly gone above and beyond to help VIP clients whenever asked. So I want to make sure that I recognize the Commissioner's efforts on behalf of our clients. Our main objection to the bill 19 is my fear that just like deeds can be created that are legitimate, so can title insurance. So we've had discussions on that with Councilwoman Sanchez and Councilman Greenlee, but I just want to point out the Councilwoman brought up Robert Coyle, who has duped hundreds of 145 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 mostly poor people in Kensington into believing that they would become homeowners. And, in fact, he had mortgaged those homes for millions of dollars, and now he's not paying that mortgage. So what he did as part of his scheme is create a title insurance company, and the risk of sham still exists. So if not today, if this bill 12 goes forward today, then before it reaches Council, we'd like to work with the Committee on some amendments. And if that's not -- if that doesn't progress, then we'd like to work with Commissioner Decker on ensuring that title insurance agents are truly licensed and that what is presented as title insurance is really truly something that these consumers can count on.
And the only other thing -- I'd like to digress from my testimony a bit -- is just express my outrage that Coyle has not been arrested. S. Attorney's hands now. And I do not understand why, when we have wonderful reporters, Isaiah Thompson from the City Paper, the two Pulitzer Prize-winning reporters from the Daily News, who can discover this evidence, why the FBI, who presumably have even more resources than Isaiah or Wendy Ruderman or Barbara Laker from the Daily News, presumably they could possibly have this gentleman arrested, and I use the term "gentleman" loosely. So now that my rant is over, I do want to thank the Committee for accepting all of the changes that we suggest and for working so hard on this issue. VIP will continue to work on the efforts that the state clearly needs to 147 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 take and that others have already spoken about. And we support this bill and look forward to continued work on that.
Thank you very much. I will be brief. We fully support Stefanie's comments on the bill. We think the bill 12 is extremely important. This is a problem that has been around for a long time. To some extent, it has gone unabated. The problem continues, and I think this bill is a major step forward. And I especially thank Councilman Greenlee and Councilwoman Quinones-Sanchez for their efforts and the work and the Committee in bringing this bill up for a vote. One of the things I think we all have to recognize -- and, Councilman Greenlee, you said this -- this bill is not an absolute cure-all. 148 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
There's still going to be problems and there's still going to be debate, do you do this, do you do that. The bottom line is, we have to do something. It may not be perfect, but we have to move ahead and get something in the law and hopefully it will get enforced and hopefully something will get done. We appreciate and support the changes that are going to be voted on, the amendments to the bill. We had a concern that there could be a problem for low-income persons if there was going to be an added fee if there was no title insurance. That fee has been taken out, and we fully support that. I just want to comment. There was some suggestions possibly having the grantor show up. That, in the abstract, seems like a good idea. There may be some practical problems. And what happens if the grantor simply refuses to 149 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 come? They're out of it. They're done. They may refuse to come. What happens then?
Yeah. The second idea -- and, again, this is, I think -- and Dina Schlossberg suggested it -- was the photo ID. For our clients, there are difficulties, and there's actually a bill pending in the State Legislature which would require photo ID to receive any state benefits. They have difficulties getting photo ID. So while on the one hand we think that's a good idea, there are some possible problems that need to be looked into, because there are a bunch of -- a lot of low-income people in the City who do not have government-issued photo ID's. Having said that, again, we fully support the bill. We think it's a big step in the right direction, and it will do a lot, we believe, to stop this 150 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 very, very bad problem. Thanks.
Thank you. Thank you both for all your efforts and for your working with us on this bill. Thank you. Any questions or comments? (No response.)
Thank you. Mr. Hayes from the Pennsylvania Land Title Association, and then it will be Administrative Commissioner Decker and Mr. Abernathy and anybody else who wants to have fun up here. (Witness approached witness table.)
Identify yourself for the record and please proceed. 151 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
My name is Edward Hayes. I'm an attorney with Fox Rothschild here in the City. I appreciate the opportunity to address the Committee today. I apologize for there not being written testimony from me, as my retention was late in the day yesterday. Let me provide you with just a little bit of background on my involvement in this industry and with this very problem that hopefully will give you an understanding of where I come from on this. For at least 30 years, my prime focus and my practice has been representing title insurance companies, and I've had the pleasure over the last many years to be appointed as Special Counsel for the Pennsylvania Land Title Association in various matters that they have considered of importance to the industry, including the 1997 lawsuit that we filed against the Department of 152 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Records to force them to comply with state law, resulting in the issuance of a mandamus that precluded the City from adopting its own separate guidelines as to how it was going to deal with records, as well as an action we initiated against the Berks County Recorder of Deeds because of the implementation of separate guidelines in Berks County that were only applicable to Berks County and impacted the ability of deeds and documents to get reported in Berks County, also resulting in a mandamus order. My practice also has had me, as Stefanie Seldin indicated, very much involved with VIP. For the last five years, I have in fact been the prime trainer in the tangled title/quiet title program, which is often directed at dealing with transactions in which fraudulent deeds have been recorded. And what I will tell you, members of the Committee, in my practice as a title insurance attorney, I have had any number 153 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 of matters referred to me over the years where in fact I am retained to represent the ultimate buyer down the road in cases where there is a fraudulent deed in the chain of title, because this is a case where there are a series of victims involved once that deed does get of record. You have the correct owner of the property who is a victim. You have, as in the case I presently have, a young couple who have moved into a house, invested their life savings into it and they've now learned that two deeds back in the chain of title a deceased person had the uncanny ability to be able to sign her name in the City of Philadelphia. That's the second victim. The third victim we have in fact is the title insurance company, because in most of these cases, the way the matter is resolved is through the title insurance company issuing a substantial check in payment to one of the parties in order to get the matter resolved. So I do have 154 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 some personal background with this, some personal background with the industry and believe that based on that, I hope you will take to heart my comments. Despite the fact that this particular bill really indicates the importance of title insurance and despite the fact that the bill also recognizes that the involvement of a title insurance company in a transaction lessens the likelihood that a fraud may exist, I appear here today on behalf of the PLTA to express concerns about this particular bill as it is first or at least initially drafted. I mentioned to your office this morning, Councilman Greenlee, one concern I had about language, in that while it is the intent of the Committee, as I understand it, to exclude all title-insured transactions from this legislation, the language that has in fact been used in this bill does not do so. 155 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487
And that is greatly appreciated, because that will in fact create a situation where this bill will not have a direct effect on deals that come in from title insurance agents. But I do raise a concern -- and I'm not here to argue the law -- that Pennsylvania is based upon a statewide statutory scheme for the recording of documents. It sets the minimum requirements for the recording of documents and mandates, in the opinion of the PLTA, that documents that meet those requirements be recorded. In fact, that is all that the litigation with Commissioner Decker was about in '97 and that the litigation with the Recorder of Deeds in Berks County was about, that there were independent and conflicting requirements that had been imposed by those local recorders that created an impediment to the recording of documents. 156 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 We are concerned that the requirements that have been placed into this bill as it applies to those individuals who are not involved in title insurance transactions, those requirements in fact conflict with the requirements of state law. There is no 9 state law that requires the production of the type of evidence that your bill 11 proposes in this case. And while no one can argue that it does not make sense that this type of proof should be required and while no one can argue that a title insurance company, for example, as a condition of insuring might require that, the statutes do not require it. It is an issue that needs to be addressed, in our opinion, at the state level, and we have concern about the legality of this bill, if enacted, as previously -- or as currently stated. We are more concerned, I believe, in two other aspects. Number one, Commissioner Decker's concern as to 157 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 the impact this bill will have on the operation of her office. I must tell you that since our lawsuit against Commissioner Decker in 1997, I've come to know her very well. I applaud her for the manner in which she is operating her office. I believe she is as conscientious a City official as I have met in 30 years, and she understands fully her need to comply with the law. And when she indicates that the burdens of this bill will affect her ability to comply with the law and her ability to comply with our mandamus order, I raise with you concern. I can't say, Councilman, whether or not it will have the effect that she says it will have. That's for you to decide with her, but if in fact it is going to delay the process of recording in any way, if it in fact is going to impact her ability to comply with the mandamus order in any way, we share -- we hope that you will share our 158 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 concern that that cannot happen. And as I said, I leave that with you, Councilman, to address with the Commissioner as to whether or not that's going to happen. She has indicated in the conversation I had with her that in fact she believes that it is going to have such an impact. And, for example, the mandamus order requires that documents be recorded in the specific order in which they are delivered to the Department of Records for recording. As a result, if any one particular deed becomes the subject of any type of investigation or analysis, technically another deed cannot be recorded in that office until that deed has been recorded or the Commissioner will be in violation of the order issued by Judge Cohen. Now, maybe the process will be so short that it will not have an impact. I can't tell you because I'm not involved in the day-to-day --
Sir, just 159 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 to interrupt, that's what we think. We don't think it will have nearly the impact of slowing down the whole process, because we're not talking about the majority of deeds. I think you know that a large amount of them -- I don't know the percentage that comes in -- it does come through title insurance.
And nothing will change there. That's the whole point. And I guess -- I don't want to cut you off, but I guess I don't understand. What you said earlier was, we have some legal concerns, but we agree in the essence it may make sense. Why don't we try to make sense?
Councilman, what I said was it makes sense to address this problem.
What I do not believe makes sense is to address it in a 160 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 way that, in our opinion, violates state law or to address it in a way that creates a problem for the very group of companies; namely, the title insurance companies, that this bill seeks to exclude.
Let me give you a perfect example, Councilman. If in fact a deed comes in that doesn't meet the requirement of title insurance, it is obligated to then undergo some scrutiny by Commissioner Decker. It may require her to look, as I understand it, at records in not only in her office but to authenticate the validity of articles of incorporation, to authenticate letters of administration that might be issued out of an estate. While that happens, Councilman, for the law to be complied with, no other deed can be recorded, and that includes deeds that come in from my clients, because those deeds will then be 161 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 recorded out of order from the manner in which they came into the office. That is a concern. That is one of the things that was addressed by Judge Cohen in the mandamus order, that the state statute requires that things be recorded in a particular order.
Let me just ask you a question, then. Everything that's brought is supposed to be recorded in this order. What if it's brought and it doesn't have the fee included? There's a fee.
The state statute requires the payment of a fee. It can be rejected for that reason.
But it has to be presented with a fee. The state statute deals with that.
And, again, I'm not 162 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 here to argue the law with you. I'm here to raise concerns of the --
And my understanding of the law, by the way, is that it really addressed the backlog, and we don't have that now, and this doesn't cause the backlog. Other lawyers tell me other things.
Having been the lawyer who prosecuted that case, I can tell you at least what my opinion is. Let me raise with you, I guess, my concern that I'm not sure this bill is going to have the effect that you really believe it is. Because, for example, the bill requires in a situation where a deed comes in without title insurance and the deed indicates that the property is being sold by an administrator of the estate of the decedent, that it requires the proof that that particular individual has in 163 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 fact the authority to act on behalf of the decedent. The fact is, from my experience -- and, again, I've had a lot of these cases over the years both for VIP and through my practice -- that's not the way the crooks function. The crooks do not function by attempting to sign a deed which indicates that it is Joe Jones as administrator of the estate of Mary Smith. The crooks simply sign Mary Smith's name to the deed. And under your bill, as presently constituted, if the crook signs the decedent's name and if the crook has a notary who either is complicit with the crook or, as so many of the notaries that I have deposed I have found in my case law, make no effort to truly determine the identity of the person before them or notarize the document when it comes to them already recorded, that deed, along with a fraudulent certification that title insurance exists, gets recorded under your bill. Commissioner Decker cannot 164 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 reject it because it has met the bill. That deed is then in the system and it allows what you're talking about happening here to happen going forward.
As I said, sir, we know we can't catch everything in this bill. We know that. We understand that, that there's going to be other things that go through, and crooks are going to get more creative. That's what they do. What we're trying to do is catch what we have seen, like Mr. Grosik and others, and we had other hearings where we had other victims come in, where things obviously are a problem that shouldn't have gone through. That's all. I mean, again, we're not trying to say we're catching everything. And we're trying to deal with the problem, and I guess --
The other 165 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 option is just keep sitting back and saying, Well, let the Grosiks pound sand for months and let's wait for the 5 State Legislature to do something, and 6 you have hundreds of these people in the 7 meantime. 8 Let's try to deal with the 9 problem. I mean, we're trying to address 10 the whole problem by we thought 11 addressing your association, by not 12 slowing down the process overwhelmingly. 13 So we're aware of that. 14
I think what Council needs to understand is that to deal with this small number of deeds, you are having potentially an impact on our industry, number one. And, number two, you're also creating an additional set of rules for the legitimate person who is trying to transact business in Philadelphia without title insurance, who now will be dealing with a property as the only county in the City of Philadelphia where they've got to come 166 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 into the Recorder of Deeds' office in order to get recorded.
And the reason we're doing that is because we have seen evidence of a lot of cases. Now, we can all define what a handful is, but it's people's lives out there and people's properties. This has been a problem, and that's why we're making those regulations. Now, the state may say we can't do it. The state tells us we can't do a whole lot of things. But I'm not going to sit back and keep letting it happen. At least I'm going to be able to tell Steve Grosik I tried and I didn't sit there and say, Well, sorry, the state says I can't do it. When we had a problem with guns -- and I'm not trying to compare guns and this -- we worked together with the Law Department to try to figure something out. We just didn't say wait until the state does something. We 167 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 passed something, it went to court, we got some, we didn't get some, but we tried to do something. We just didn't keep sitting back and saying we got to wait for the state. And that's what I think we're involved here. I'm tired of hearing, The state says this, the state says that. Well, let's pass this bill and let somebody sue. I believe the only people that are really going to be impacted by this negatively are the thieves, and I don't think Anthony Mitchell is going to court to sue. That's what I think. Maybe I'm wrong. Maybe for principle somebody like you will do it, will sue. I don't know. If you do, I feel bad for you, because I think that would be the wrong thing to do, but that's up to you.
Well, the other thing that I'll share concern that was raised about the funding that's available to the District Attorney's Office to prosecute these cases, because I will 168 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 tell you, Councilman, I share the frustration of being involved in as many of these cases as I have where you cannot get the criminals prosecuted. And when the District Attorney's Office has to impose a minimum number of properties because of budgetary concerns over which they will not prosecute, that's ridiculous, in my opinion.
And I agree with you there, and that's the reason why we're trying to give them less cases to have to prosecute. That's the whole point of this, is that there will be less cases they have to prosecute. We know they got a budget problem, and we had a debate particularly with the previous DA about how many they prosecuted, and, you know, that's their call and all that. What we think we're doing is, as Councilwoman Sanchez and I said earlier, is saving money in the long run because they don't have to prosecute some of those cases, because those deeds 169 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 won't be accepted. That's what we're trying to do. You know, I mean, to try to deal with it later and while they're dealing with it later, again to use an example, Steve Grosik is out there trying to figure out where to live. That's -- I keep going back to that, and, again, legally I might be wrong and I'll go on record saying, I don't care. All right? I want some of these people get help and quit looking to try how not to do it and how to do it. Allegheny County figured out how to do it. Now, I don't know if they'll be held legal and maybe they changed their thing around and called it the Office of Real Estate. I don't care if they call it the Office of the Bouncing Ball. They're trying to deal with the problem. And most of what we deal with is after the fact. They're trying to deal with something before the fact, and I think that's what you have to deal with, and we 170 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 don't have to have as much District Attorney cases, we don't have as many people running into court. I don't know. Maybe I'm the simpleton here, but --
Well, Councilman, again, I don't want you to misinterpret. Again, we are not saying this is not a problem. We are not saying it doesn't exist.
I'm against the bill because of the concerns that I've raised with you and the impact it may have, number one, on our industry, and, number two, that the fact -- and I hope I'm wrong, Councilman -- that the criminals are not smart enough to get around your bill. But I would like to see things addressed, some of which you can't, which include the increased scrutiny of notaries, because without the acknowledgment of documents, the deed 171 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 doesn't even get to Commissioner Decker in the first place; the increased prosecution; and potentially as a lawyer some streamlining of the fraudulent conveyance court system so you don't have the circumstance that you heard this morning of months and tens of 9 thousands of dollars. There's no reason 10 for that when there's a court, in my 11 opinion, that's in place for that. 12 So, again, we're here to 13 express our concerns about the bill. The 14 PLTA stands ready to work with your office or anyone else, as I mentioned to your aide this morning, in trying to find a way that this problem can be resolved, because, again, the industry is a victim in this also with the hundreds of thousands of dollars that they pay each year in claims resulting from this. So I thank you for your time.
Okay. Thank you. Thank you for coming. Our last witnesses on record 172 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 are the Records Commissioner and the other members of the Administration. Oh, Ms. Caulfield, real quick, if you could make it real quick, because I don't want to keep going back and forth. You have to come to the table, please. I'm sorry. I know you said you wanted to say something. (Witness approached witness table.)