A Utah court case in which the owner of a D****r townhouse got clear title to the property, even though he still owed $132,000 on it, raises new legal and financial questions about a property-records database created by mortgage bankers.
What happened here was that an attorney went in and filed a "quiet title" action - that is, to remove any clouds on the title. The problem MERS instantly ran into is that it has publicly disavowed being a real party at interest - that is, it's only a nominee. Therefore, it doesn't have to be named.
This is a major problem for them. See, the point of MERS is to avoid paying recording fees. But the point of property records is to provide a clear and clean record of who owns a property and who has an interest in it - including who has a lien. MERS entire purpose is obscuring this and abstracting it to a thing inside their database only, making the disclosure of the underlying facts a function of the investor's desires, rather than one of public notice and record.
Unfortunately for MERS (and those who bought paper allegedly "secured" in this fashion) state property law says otherwise in a number of jurisdictions. Specifically, State Property Law in some jurisdictions requires that security interests be held by a named entity, just as a deed must be. That is, you can't transfer a deed "in blank" nor can you have a security interest "in blank"; the identity of said person or corporation has to be known and recorded.
What happened here is that an enterprising attorney, recognizing this, sued for quiet title - that is, to remove any clouds on the title. Since MERS was not entitled to be noticed as they by their own words and actions are not a real party at interest, they didn't know about it. The title companies, which were on the original records and the original writer of the mortgage, who were in the records, didn't bother to respond because the title company doesn't hold the paper and the original lender was paid in full when he sold off the note - so he has no real interest either.
Mish is going bananas over this, claiming it's "a travesty of justice."
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