In the case of lost notes, I think the bank doing the foreclosure would have to trace the note back to the original lender, or start with the original lender and go forward.
Absent paperwork, it would not be unreasonable to argue that the last bank to whom payments were made (at least for a period of time) would have a suprerior claim on the property.
Banks could also pay a title company to do a title search, but that could get pretty expensive if there are a lot of foreclosures.
no, because the bank with the actual real promossory note can still sue you anyways.
I think their should be a way to extinguish defective mortgages and collect against the last bank for unjust enrichment. But who to sue? the servicing bank? the traunch? the trust?