You are correct, if institutions are not allowed to fail they will repeat bad behavior, allowed to fail they will naturally correct.
That being said, my sister who is a town clerck has railed about the chain of custody of these documents for years and predicted this in ‘08 during the meltdown. She also contends tha many of the original documents will never be found, bottom line, many deadbeats will walk away with their homes debt free.
Makes one kinda feel stupid playing by the rules.
I suspect any place where a lot of houses were flipped multiple times has this problem.