I know there was talk back when the mortgage crisis went down that many mortgages had been bundled and sold so many times that nobody could figure out where the actual titles to the properties were. I wonder if some of these are those cases.
Good point. I recall that a lot of jurisdictions refused to permit foreclosures by companies that were not on the recorded first deed of trust. The banks transfer the loans all the time without ever transferring the actual recorded first deed of trust and what happens then is you end up with a third party trying to enforce a foreclosure that they really have no right to enforce as they are not on title.
The practice also defrauds a lot of municipalities out of proper fees for recording title and since they have not been paid to record a new deed holder then why should they recognize them?