A Coeur d'Alene resident believes the county is not documenting all related parties during foreclosures as required by state law, and insists the county is missing out on revenue as a result.
"This is just money for the county," said Vermont Trotter, director of the National Homeowners' cooperative. "I'd love to see the county have extra money so it doesn't have to lay off police officers and so it can keep having a fire department."
Trotter pointed out that under title 45, chapter 15 of Idaho statute, to foreclose on a trust deed, a trustee must record with the county any changes in the beneficiary ownership of a loan, like when banks or other corporate entities financial invest in a loan and earn interest off it.
There is a recording fee to document the beneficiaries of a loan, he pointed out.
But not all of those are being recorded at each foreclosure, he contends.
That's what Trotter discovered while looking into the foreclosure of his own property in Kootenai County, he said, over which there is a multi-year lawsuit still running.
He can point to other lawsuits across the country like Hooker v. Northwest Trustee Services, heard by the U.S. District Court of Oregon, where it was discovered that all beneficiaries were not recorded.
"They're not complying with law," Trotter said. "That's the issue."
This means the county is missing out on a whole lot of recording fees, he added.
"Say we've had 5,000 foreclosures since 2002," he said, estimating that maybe several beneficiaries could be documented per foreclosure. "That's how much money they're not looking at."
County Clerk Cliff Hayes, who also acts as recorder, said there is a high likelihood that all the beneficiaries are not being recorded at every foreclosure.
His office just records the documents that are brought in, he said.
"If there's a foreclosure going on, nobody has to notify me," Hayes pointed out. "How would I be checking to see if it was recorded or not?"
There are many states across the country that are analyzing the matter, he said, adding that he is waiting for a green light from the prosecuting attorney to look further into it.
Recording all beneficiaries would bring in some revenue, Hayes said. The fee is $10 for the first page of the document, he said, and $3 for each ensuing page.
"I don't know if you could say a lot," Hayes said. "But yes, it's potentially got some revenue to it."
Prosecuting Attorney Barry McHugh acknowledged that if all the appropriate documents haven't been filed, that does leave an opening for a property owner to block a foreclosure.
"A foreclosure can be stopped, for lack of appropriate chain of interest," McHugh said.
A possible solution, which he might take to the Legislature, is changing state law to require changes in beneficial ownership be recorded when they occur, not just when a foreclosure is initiated.
But McHugh doesn't know if the matter is pressing enough to warrant lobbying, he said.
"I agree that it creates confusion," he said. "Whether that is cause enough to change the statute, I haven't reached a final conclusion yet."
Sen. John Goedde, R-Coeur d'Alene, said the issue has never been raised at the Legislature, to his knowledge.
Although he's not close enough to the issue to have a personal opinion, he said, he would be willing to discuss what McHugh has suggested.
"I'm certainly aware that foreclosures are becoming a much greater issue over the last couple of years than before in Kootenai County," Goedde said. "If there's a problem that needs a fix, I'd be willing to take a look at what that fix might be."
Trotter said he would still prefer the county demand that all the proper recording occur before any foreclosures. Also, he wants McHugh to go back over the past several years to charge any entities that were not recorded properly.
"We just want to get our records straight," Trotter said.
McHugh said he sees this as an issue only the state has the power to address.
"A change would have to be considered by the Legislature," he said. "They determine what needs to be recorded and what doesn't need to be recorded."