Hundreds of Years of Title Destroyed in a Decade and a Half
By Daniel Edstrom
DTC Systems, Inc.
Posted on June 18, 2011 by Neil Garfield
What nearly everyone is missing is that any property that was mortgaged at any point in the last 15 years may have serious title defects. Here is the scenario:
- A house is purchased or refinanced with a mortgage
- At some point in the future the house is refinanced again or sold
- A title company sends a payoff amount to “an entity”
- “An entity” issues either a substitution of trustee and full reconveyance or a full reconveyance (or other type of document used to release the loan)
- Repeat ad nauseum (or this only happened one time)
Here are the problems seen repeatedly over and over again:
- The “mortgage” was actually a securitization and the loan was transferred to numerous entities outside the record chain of title
- The house is refinanced or sold despite the fact that the “owner” of the loan is not in the chain of title
- The title company knew or should have known that they were sending money to a stranger to the transaction
- The stranger to the transaction usually submits the reconveyance (without authority) to the land title records, although there are variations of how they do this. In many cases these documents appear to contain forgeries and false statements.
The result? You might be current on your loan, you might have paid cash, or you might have a lender who actually “holds” the loan and never securitized it, but you still might have a serious defect in title (an unmarketable title).
In my opinion an abstract of title will need to go back 15 years to look for these types of defects. These are complicated issues, consult a real estate attorney with knowledge in these types of title issues as well as securitization.