Substitution of Trustee – DTC Systems Inc

Title Crisis

Title Crisis

By Daniel Edstrom
DTC Systems, Inc.

If you thought this was a foreclosure crisis brought about by the Mortgage Meltdown, you would be wrong. If this were a foreclosure crisis only those in foreclosure would be the ones having problems. And only those loans in foreclosure would be the ones having title issues and “robo-signer” issues. I cannot say this loud enough: FORECLOSURE IS NOT THE PROBLEM. Homeowners not making payments is not the problem. “Freeing up” credit to stimulate lending is not the problem. If you didn’t get a subprime loan, and yours is a 30 year fixed, you are at risk of a clouded title almost as much as anyone in foreclosure. In fact, if you have refinanced or purchased your house from 2000 or later, you could easily have a defect in title. Since I am not a lawyer and can only give myself legal advice, I will only discuss my own case. And of course these are only my opinions based on my knowledge, education, training and research. Apparently my title company thinks my title is good. I know because somebody asked them and they said it was good. At the end of the article I will explain why they would say that. What they meant to say was “Everything is great because we, as a title company, are not at risk at all based on our review of your title”. Continue reading “Title Crisis”

Hundreds of Years of Title Destroyed in a Decade and a Half

Hundreds of Years of Title Destroyed in a Decade and a Half

By Daniel Edstrom
DTC Systems, Inc.

Neil F. Garfield, Esq. just posted the following article:

TITLE CRISIS: EVEN IF YOU PAID CASH FOR YOUR HOME, TITLE STILL IN DOUBT — and you could be “underwater”

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) Continue reading “Hundreds of Years of Title Destroyed in a Decade and a Half”

Failure to Allege Lack of Default

Failure to Allege Lack of Default

by Daniel Edstrom
DTC Systems, Inc.

I came across the following on Google Scholar (http://scholar.google.com/scholar_case?case=16055101289176414591&q=Restatement+(Third)+Of+Property+(Mortgages)+%C2%A7+5.4&hl=en&as_sdt=2,5):

A. Failure to Allege Lack of Default

First, Nevada law is clear that “[a]n action for the tort of wrongful foreclosure will lie if the trustor or mortgagor can establish at the time the power of sale was exercised or the foreclosure occurred, no breach of condition or failure of performance existed on the mortgagor or trustor’s part which would have authorized the foreclosure or exercise of the power of sale.” Ernestburg v. Mortgage Investors Group, No. 2:08-cv-01304-RCJ-RJJ, 2009 WL 160241, at *6 (D. Nev. Jan. 22, 2009) (internal citations and quotations omitted). The plaintiff must establish that they were not “in default when the power of sale was exercised.” Id. (citing Collins v. Union Fed. Sav. & Loan Ass’n, 662 P.2d 610, 623 (Nev. 1983)). Furthermore, a claim for wrongful foreclosure does not arise until the power of sale is exercised. Collins, 662 P.2d at 623.

Continue reading “Failure to Allege Lack of Default”

The Wrong Remedy at the Wrong Time, Part 1

The Wrong Remedy at the Wrong Time, Part 1

By Daniel Edstrom
DTC Systems, Inc.

New Note added on 1/22/2012 thanks to Simonee. California Probate Code does not seem to apply based on this California Supreme Court decision: Monterey S.P. Partnership v. W. L. Bangham, Inc. (1989) 49 Cal.3d 454 , 261 Cal.Rptr. 587; 777 P.2d 623 (download here: http://dtc-systems.net/wp-content/uploads/2012/01/Monterey_SP_Partnership_vs_WL_Bangham.pdf)

Monterey S.P. Partnership v. W. L. Bangham, Inc. (1989) 49 Cal.3d 454 , 261 Cal.Rptr. 587; 777 P.2d 623

Here is a quick overview of what happens in a non-judicial foreclosure. If you are in a judicial state, this post does not apply directly to your case. But if you understand what happens in a non-judicial foreclosure, you may get insight into what might apply to your case.

I am not indicating that any of these documents are true or accurate, just that this is what typically happens.

Closing the Transaction

The homeowner executes a note and security instrument (i.e. Deed of Trust). The parties to the trust created by the Deed of Trust are the trustor (homeowner), trustee (usually a title company) and the beneficiary (either MERS or the named lender). Everyone seems to assume that the trust was constituted (created), that it is valid and continuing. This is where the trouble begins (not really, but for this article we will assume it begins here and not before).

Notice of Default

Supposedly the Notice of Default is recorded and sent to the homeowner by the agent for the beneficiary. Who is the beneficiary? Looking at my notice of default the only beneficiary mentioned is MERS. However, other documents sent usually point to one or more other parties who “might” be a beneficiary.

Continue reading “The Wrong Remedy at the Wrong Time, Part 1”