Posted on 01/17/2011 10:33:26 AM PST by FromLori
A Utah court case in which the owner of a Draper 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.
The award of a title free of liens means that whoever owns the promissory note on the Draper property — likely a group of faraway investors — no longer has the right to foreclose to collect on a delinquent loan. Indeed, the townhouse owner has sold the property and kept the money. Those who own the promissory note probably don’t even know what occurred.
Decisions such as the one 3rd District Judge Glen Iwasaki handed down in the Draper case could have a big impact as the state wends its way through hundreds of lawsuits involving foreclosures, loans on properties for more than they’re worth and predatory lending practices that led Utahns to lose their homes as the real-estate bubble burst.
(Excerpt) Read more at sltrib.com ...
WHAT A CAN OF WORMS!!!
Someone screwed up.
Title is title.
That piece of paper is the only thing that shows ownership........
A small part of me would like to see more people doing this. Just apply for a quiet title and see what happens. It might be the catalyst in cleaning up this whole debacle.
“Someone screwed up.”
Looks like that someone is the banks who created MERS out of Greed but unless the investor’s are successful in all those suits they are bringing against the banks they will be the ones eating those losses. Have a 401k/Pension fund invested in a Bond that holds MBS’s that someone could be you.
Can you imagine what would happen is a celebrity with multi-million dollar mortgage found out that they could get a quiet title and not have the note attached to the property.
Now imagine that celebrity’s fans deciding to do the same thing because their idol had. I can...
Yes, I have little sympathy for big professionally run companies who can’t keep a simple paper deed.
I guess anyone can get hit with a fire or flood, but beyond a natural disaster, there should be verifiable paperwork.
If someone owed my $250,000, you can be sure I’d have the note in a waterproof fireproof box.
With no proper physical records, anyone can claim that anyone owes them anything. There is no evidence.
I think the mortgage sellers and buyers were dumping these things left and right and everyone making a point everytime they sold one. So they’re weren’t really paying too close attention because they planned on selling the things after a few months anyway. And as with all pyramid schemes, someone was left holding the bag.
Am I reading this right? It sounds like the borrower screwed the lenders by means of a legal technicality or recording error.
Yep. Lots of folks took out loans they never expected to pay back, and now want the house free and clear.
And they might get it!
That said, the analysis doesn’t end there.
The note is still enforceable. The lender can get a judgment on the note, and then execute the judgment against any and all property, including the house.
So what MIGHT have been a no-recourse loan if it had gone to foreclosure, now becomes fully enforceable against ALL assets.
And if you file Chapter 7, the free-and-clear house goes to the bankruptcy trustee for auction.
Fools and their money (and houses) are always parted.
YES, IT'S THE END OF THE WORLD, IN ALLCAPS! YEEEARRRGGGHHHHHHH!!!!!!
Possible examples are endless. In North Carolina, say you buy a lot somewhere, get a "lien-free" title unaware that someone has been squatting on your land for more than seven years. Unchallenged, the squatter has a claim on the property that follows the title, regardless of what the title says. That is an example of a kind of lien that does not involve a "race to the courthouse," where liens are prioritized based upon the order in which they were filed at the county seat.
The courts clear up the evidence, but in most states the laws are pretty well mapped out.
Basic Real Property law should be required in high schools. The Chain of Title is and the Bundle of Property Rights are cornerstones of our civilization. I doubt it's a requirement for getting a journalism degree, though.
Yes. Heaven forbid that our lords and masters, the Banksters, should have to follow the law like us peasants do.
Next thing you know, the peasants will be wanting people like Bill Clinton to have to follow the laws on perjury and obstruction of justice like the tax-paying gutter trash have to.
“Am I reading this right? It sounds like the borrower screwed the lenders by means of a legal technicality or recording error.”
It was not a “recording error” the banks did not record the transfer of ownership on purpose. there were two very good reasons for this, first they did not want to pay the recording fees and second (and more importantly) they did not want MBS (mortgage backed securities) investors able to actually know what kind of garbage loans they were being sold as AAA securities. State law is pretty clear about requirements for proving ownership of property and for good reason, if they did not then anyone could claim they owned the loan and try and foreclose so this is not just some “legal technicality” it is the whole basis of our property ownership laws.
No, the lender screwed an investor and the county by selling something without proper procedure.
You are assuming that folks who make $25K and borrow $500K on a $150K house that "appraises" for $700K are rational people that would know a quiet title from a hole in the ground. I'm not excusing the idiot bankers, but I'm not sympathizing with the idiot borrowers either. Like I said, fools and their houses are (eventually) parted.
Amazing how all these deadbeat sharpie borrowers managed to con those babes-in-the-woods financial illiterates that run the Big Banks...
There oughta be a law against taking advantage of these poor unknowing Banks!!!
That is not the law in all states, and the guy still owes the money. He’s one court decision away from losing everything he owns.
This is why people buy Title Insurance
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Title insurers have already stated they will not cover this scenario. Whoever bought the guys house in the article is not covered by title insurance should the bank or investors challenge the quiet title.
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