One of the hallmarks of third world countries and banana republics, is that no one can easily come up with clear titles to property. Incomplete documents, lost documents, contested documents, counter claims, incomplete litigation etc etc. It sounds like we are taking another step down the road to becoming exactly like them.
It sounds like we need some “custody” banks to be repositories of documents for loans...sort of like some banks being the registry for certain stocks and their ownership.
It also sounds like some people will end up owning their houses free and clear, but won’t be able to sell them due to a faulty title.
Don’t counties also have copies of mortgage notes on file? If the bank lost it, wouldn’t the county the property is in have it?