[quote=bubba99]Yes, I think this is a real problem. For centuries, all property records were kept at the local county recorders office. With MERS, that all ended. The notion of a Trust Deed that gave title to a property or (loan on a property) is forever clouded. In the “old days” the paper deed was kept at the bank and returned to the homeowner when the note was paid. The county had all the appropriate records recorded in their “books”
But that “paper” never existed for many of the note resale’s under MERS. There very well could be multiple people who believe they own a note on a particular property – MERS is the only record. The original trust deed lost forever.
The county would charge a recording fee each time a title was changed or encumbered. But not under MERS, the funds were never paid the changes never record, but the fore closers want the counties to enforce their implied claim anyhow.
I suppose that title companies could just insure the hell out of a sale until the claims forced another AIG type of bailout We are in for a long ride.[/quote]
Okay you are conflating 2 or more things here.
1)
The deed defines who owns a property.
It is almost always recorded (though it can be enforceable without recordation).
2)
A note is a private contract between a lender and a borrower.
It is not generally recorded and may be re-sold.
3):
A trust deed defines the consequences for violating the note.
Technically, it creates a trust where the borrower is a trustor, who entrust a trustee (of the note holder’s choosing), to keep a copy of the trust deed.
If certain circumstances (defined in the trust deed) are met (like the borrower stops paying for a year) that trustee is entrusted to a) hold an auction for the property and b) turn the property over to the beneficiary of the trust (the lender) if nobody buys the property at the auction.
It is recorded but only kicks in if certain conditions are met.
None of these things has ever changed.
What has changed is that the note (the private lending contracts) have been securitized and re-sold and such (sometimes without a proper trail). The problem with MERS is that it hires itself out as a database and clearinghouse for notes with itself listed as nominee for all the banks.
Therefore if Wells sells a note to ABC fund (both of whom have MERS as their nominee), then it is really sold from MERS to MERS and the transaction only exists in their records.
Also, the physical notes (which is supposed to be the final record of the ownership of debt) get all screwed up because of sloppy acquisitions and record keeping.
Here is an example of the selling of these notes:
My client took out a loan with an outfit called 123Loan.com (or something equally retarded).
This lender (which consisted of 10 employees and 1 small office) was a correspondent lender for First Franklin (that is where a small lender underwrites loans with an agreement from a big bank to buy them as soon as they are originated–generally based on the big bank’s underwriting standards).
First Franklin was swallowed by Merrill Lynch.
Merrill Lynch was crammed down the throat of BofA.
Therefore, when I was negotiating the short sale, I was dealing with a BofA negotiator.
