I see the point of the State Laws...
The trust deed secures the note. If someone SELLS the note but retains the trust deed, the person who owns the NOTE has recourse ONLY to the holder of the TRUST DEED. Not to the property owner. The note - split - becomes unsecured, as written in the statute.
Doing things this way was a shortcut, to make a MARKET out of bundled notes. Not the original intent of the transaction, for sure on the part of the borrower. But something the big bank wanted to do to make mass money off of individualized transactions.
Splitting the note from the deed leaves the note unsecured. If they wanted to sell the bundled notes, they needed to and should have transfered all the supporting deeds, to follow the rules.
They took this shortcut and now are getting burned. BUT it IS a shortcut, and they took it - perhaps un-aware of the consequences (like Arizona - did they read the law?), OR hoping that no one would catch on.
THIS is similar to the shortcuts and corner cutting BP took in engineering and operations in the Gulf blowout. They have done this a lot - for a long time - and finally have gotten bit in the ass. Drilling deepwater IS safe if properly engineered and executed. But if you cut seven corners and blow off four safety issues, and then do something stupid on top of it - you can finally pile up enough idiocy to result in disaster.
The banks want to treat this as a mass market, but for each homeowner / borrower, it is their life’s biggest spending commitment and obligation. They deserve to be treated as individuals, to have their case heard by someone - a PERSON - with authority to act and understanding to take each transaction for its facts and circumstances - not just foreclosure number 4079 in a list of 10,000 to be processed.
I rarely am pro-lawsuit - but in this case I believe the state law’s intent and the guy filing the suit are right, and BofA and the MERS and bundling market were gaming the system and are NOT following the law in letter nor intent.
IMHO
I agree with your logic. If I make a loan and the loan is secured with property and then I sell the loan to some some else then I have been Paid for that loan. If the “person” who bought the loan fails to update the deed, there are SOL.