Non-Securitization Effect on Title

I just finished a seminar given by NBI which was basically in lay terms “How to Repair the Chain of Title.” We covered everything about assignments, breaks in the chain etc. The opportunity arose for questions. I was the first to ask a question, in which I posed a hypothetical that is an accurate reflection of the manner in which foreclosures are being completed and deeds are issued upon the close of bidding at the auction, which it turns out was a question that was on the mind of some other listeners. The answer was that the foreclosure sale is invalid, the deed is in essence a Wild Deed, which under most state statutes is simply void, and does not require any action by the court or anyone else to invalidate it. In other words, in the typical Wild Deed situation, it is simply ignored.

A Wild Deed in simplistic terms is a Deed from someone who is not already in the title chain. The mere filing of self-serving documents as the pretender lenders have done, is a nullity. Any act proceeding from a nullity is also a nullity including the foreclosure and the deed that was issued is a nullity. This is because of the alleged auction sale in which the alleged creditor made a credit bid, was outside of the chain of title. What chain of title? Of course the one in the public records of the county in which the property is located. Add to that the fact that the party who made the credit bid was not a creditor and you can see how messy this venture is getting. The illusion of finality of foreclosure is creating a very expensive nightmare.

I’ll write more about this later. But it certainly corroborates the statement I made starting three years ago — that even if the “foreclosure sale” has already occurred, legal title to the house is still in the name of the homeowner and the deed issued from the foreclosure sale is void. It also means that legal title to the security instrument (deed of trust or mortgage) remains in the name of the loan originator.

If the loan originator is still alive and well, it is possible to re-create the assignment that was intended, but it isn’t easy as you must recite in each affidavit and post hac assignment the actual facts and circumstances surrounding the transfers, why they were not done before etc. This is basic property law.

If the loan originator is dead, it might not be possible to correct the title deficiency as to the loan, without a court order. This also corroborates my prior statements that non-judicial sale is not available in claimed securitized mortgages, because the chain of title does not exist. The only available remedy is judicial foreclosure — if they can make the required allegations in good faith and then prove those allegations to be true, with the burden squarely on the party seeking foreclosure.

One would think that in a State like Arizona they would want to file judicial foreclosures, because they can probably make a case for a deficiency as well. But the pretender lenders are fighting any notion that judicial foreclosure is required or even appropriate. Why? Because they cannot in good faith make the necessary allegations in a lawsuit that would support the relief they seek, and they certainly cannot prove those allegations. The facts are in nearly all cases, that there was no assignment, indorsement or delivery before the notice of default and no self-serving document can change that simple fact. The record is clear and MERS is not “PUBLIC RECORDS” (just ask them).

Bottom line: They want ONLY non-judicial sales because they could not even file a foreclosure lawsuit without suffering defeat, fines and penalties for filing frivolous pleadings. Put another way, they want non-judicial sale because they know they would lose in a judicial proceeding. And the Courts that allow this are contributing to a growing mountain of title problems that are starting emerge now as literally not subject to correction. The outcome? Well, if the courts keep ruling for the pretender lenders, the homeowners — even the ones foreclosed long ago — are still the legal owners of the property and the pretender lenders are going to get more objections from the attorneys for buyers saying that Seller cannot provide clear title. Those buyers without an attorney or whose attorney miss this central, simple record title issue, will have the problem passed on to them. This type of situation has occurred before. It always ends the same way — with the Courts and legislature back-tracking and arbitrarily creating a fix to the dismay and loss, usually of the banks and those who relied upon them.

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