WHAT I LEARNED AT THE NBI ADVANCED TITLE ISSUES SEMINAR

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HERE ARE MY NOTES: NBI Advanced Title ISsues

I attended a seminar yesterday and came up with some interesting information, as well as receiving news that a guy I know won his UD action and in the process was restored to full ownership of his home free and clear of the mortgage. The case didn’t extinguish the debt, but ti is going to be hard for HSBC to come back into court unless they have ALL their ducks in a row. Amongst the things I picked up (see below) is that the issue securitization is avoided like the plague by the insurance carriers, the insurance agents, the attorneys who do the transactions, and the attorneys who litigate title issues. They treat securitization as an issue where all the facts or events occur AFTER the closing and thus AFTER the title policy was issued. This of course is a mistaken presumption.

I was surprised by the lack of knowledge regarding table-funded loans, the secondary markets and how they operate. But I did get corroboration of what Dave Krieger told me. The carriers definitely agree that that the mortgages are probably invalid for a number of reasons. So their position is that the elements of an insurable interest are not met (see below). SO if they were presented with claims from the banks, which they are NOT receiving on any case where the title issue is lost, the insurers will take position that there is no coverage because (a) there is no properly recorded instrument to insure — e.g.., Deed of Trust, Mortgage Deed etc. and (b) there was no economic interest to insure and thus no damages. The successors to the title policy, if any, do not acquire greater rights than the original insured, which is some party designated by the securitizing parties who orchestrated the table funded loan.

BUT neither the attorneys who make their living off these policies and closings and litigation regarding the policies nor the title companies are willing to come right out and say the mortgages are all unperfected security interests because the banks would hate them for that. And where do they get their business referrals? The Banks. So the securitizing banks are not submitting the claims on the title insurance and the insurance companies know that the old mortgages are not valid and potential void or wild deeds. But, as I thought about it after leaving the conference, that woudl mean that there are problems with any title policies they issue today on property that ever had a loan that was claimed as securitized but which is subject to being overturned or eliminated from the property records.

One of the main things is that the homeowner is relying upon the title company to do its job and is relying upon the title company’s representation of the status of title. But the title companies maintain that theirs is only a contract that states the risk they are willing to undertake and NOT a representation as tot he status of title. As a practical matter, when I brought it up, they conceded that if that position were upheld, the buyer of a piece of property would never know if he/she was really getting title unless they ordered a title abstract or otherwise ordered an extra service from the title company. The title agents do not offer this extra service, You must know about it and ask for it and pay for it.

BOTTOM LINE: Title examiners when presented with specific facts are universally applying the same standards and reaching the same conclusions: a mortgage that does not have the correct legal description, a foreclosure sale that is defective, a table funded loan in which the mortgagee or beneficiary is not the party who was the actual lender and therefore not possessed of an insurable interest.

Hence we have a left-handed statement that completely corroborates what we have been saying on these pages — that the pretenders are just that, pretending to be lenders, and that the original mortgage is a void wild deed that does not in fact create a security interest in the property but instead describes a transaction that occurred between people who were not made party to the signed documents. It is the same as a bad legal description of the property itself.

The documents do not describe the right parties or the right transaction. That leaves a potential obligation hanging out there, but not owed to any of the securitizers unless they can show they loaned the money, they didn’t get paid for it, or that they purchased the loan and didn’t get paid for it.

WHAT I LEARNED AT THE NBI ADVANCED TITLE ISSUES SEMINAR
MAIN TAKEAWAY ITEMS:

1. INSURABLE INTEREST (RELATES TO STANDING AND REAL PARTY IN INTEREST): Title insurance only applies if there is an insurable interest. It was universally accepted by the conference (including those who were there to protect the interests of the banks and pretenders), that an insurable interest includes two elements: (a) a recorded instrument naming that party and (b) an economic interest in the property. Thus if we take the position that an insurable interest is based upon law and not just policy, it can be argued that in the absence of an insurable interest, the title company will not issue the policy and the Court should not and may not validate the interest, since it is ipso facto, uninsurable.
2. DUTY TO INQUIRE: As the number of transfer of the “indebtedness” (the note) increases, the duty to inquire increases, and the more nervous the title examiner or transactional lawyer becomes.
3. PRODUCE THE NOTE: Producing the note is universally accepted as law despite some court decisions to the contrary. In Florida and other states the forecloser must produce and tender the original note to the court in order to obtain an order from a Judge to sell the property, and without the note, the forecloser cannot submit a credit bid. So even if the Judge lets the case go through, the sale can be attacked as being no sale (Void, not voidable) because the forecloser did not comply with the requirements of law to establish itself as the creditor.
4. PARTIES IN POSSESSION: Title insurance policies universally have an exception for the rights of the parties in possession. Presumably that means at the time of the transaction. So if the transaction was are financing (which accounts for more than half of all mortgage transactions, the party in possession is the homeowner. The argument can be made that the title carrier made the exception — and that assuming they are experts in title — that exclusion should be used in any litigation of the parties regardless of whether the issue involves the title policy. Thus the homeownerʼs rights include multiple affirmative defenses, counterclaims and cross claims which need to be heard in a hearing in which actual evidence is heard which means that actual COMPETENT witnesses must be heard to authenticate any documents proffered into evidence.
5. IDENTITY OF PARTIES: Any situation in which the named insured on the title policy is different than the instrument on record identifying the mortgagee or beneficiary results in an uninsurable interest which can be translated as non-marketable title. Hence the originated loan documents prove that the transaction was a table-funded loan in which the true lender was not disclosed. This means the original documents are fatally defective and cannot be cured without the signature of the borrower or a Court order which would require a hearing in which actual evidence is heard which means that actual COMPETENT witnesses must be heard to authenticate any documents proffered into evidence.
6. CREDIT BID AND CREDITOR: Only a creditor may submit a credit bid. If anyone else bids, the Trustee or clerk usually has no discretion but to issue a certificate of title (deed) which gives clear title to the grantee, which c an either be the borrower or someone standing in for the borrower.
7. Title insurance is not a magic bullet. It does not prove the status of title.
8. UNRECORDED INSTRUMENTS AND EXCEPTIONS: Generally unrecorded instruments are not covered by title insurance. In Arizona and other states there is general acceptance of the idea that based upon statute and ATLA standards successors in interest to the debt do not need a new title policy. BY inference this would mean that they are giving credence to the idea that the mortgage follows the note, whether the transfer was recorded or not. But upon questioning the experts who delivered the presentation agreed that as the number of transfers increased the transaction becomes suspicious and that the rule regarding successors was probably meant for single transfers.
9. REGISTRATION AND GOOD STANDING OF CORPORATE ENTITIES: A transfer by a corporation not in good standing in the state or states in which it is required to be registered may not transact business nor bring any judicial proceeding. Mere ownership of property is not considered doing business. But a pattern of conduct of transactions is all that is needed. If the entities (any of them) that are involved in the chain of title are either defunct or in bankruptcy, any assignment, allonge or other instrument is invalid. It can be cured but there are time limits on how long they have before they cure, and it may be that reinstatement may require a name change. After 6 months in Arizona the name of the entity that should have registered is up for grabs which means you can incorporate under that name. What you can do with that name is an interesting proposition that was not discussed.
10.CONFLICTS OF INTERESTS: Conflicts of interests apparent on the face of the document or otherwise known to the title examiner create a duty to inquire. Therefore, since the usual pattern is that these documents are created after notice of default and usually after the matter is in litigation and sometimes not until hours or days before a hearing in which the documents need to be produced, the matter is a question of fact that needs to be decided after hearing evidence which requires competent witnesses testifying from personal knowledge.
11.BOARD RESOLUTION REQUIRED: No officer may sign a deed without board resolution. It is possible that estoppel, waiver or apparent authority might apply in the situation where the complaining party is a bona fide third party arms length purchaser for value.
12. IMPUTATION OF KNOWLEDGE: In Arizona the knowledge of the Trustee is not imputed to the Lender, but there is no reference or prohibition against imputing the knowledge of the Lender tot he Trustee. The practice of ALWAYS substituting trustees instead of using the old one is a cover for the fact that the old trustee would probably ask some questions rather than simply follow orders and send the notice of default, notice of sale etc.

Tags: disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, predatory lending, quiet title, rescission, securitization, TILA audit, title companies, title insurance, trustee
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