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MERS The Plot Sickens, Quiet Title Actions, and The Rule of Law

17 Jan

We have to go with Karl Denninger on this one: when you cheat the system for your own pecuniary benefit, you get the consequences…

So here we have a homeowner who got clear title to the property even though the debt was not paid off and there was no release of the mortgage. Why? Because MERS is not a party to the transaction, and never was – and in Utah, at least, there is no transfer of the mortgage or the title if there is no named party at the transfer. Or, to put it another way, transfer in blank is no transfer at all.

Here’s the story as it appeared in the Salt Lake Tribune:

How accurate are property records?

By Tom Harvey

The Salt Lake Tribune

First published Jan 15 2011 07:04PM
Updated Jan 16, 2011 11:55PM

A Utah court case in which the owner of a Draper townhouse got clear title to the property, even though he still owed $132,000 on it, raises new legal and financial questions about a property-records database created by mortgage bankers.

The award of a title free of liens means that whoever owns the promissory note on the Draper property — likely a group of faraway investors — no longer has the right to foreclose to collect on a delinquent loan. Indeed, the townhouse owner has sold the property and kept the money. Those who own the promissory note probably don’t even know what occurred.

Decisions such as the one 3rd District Judge Glen Iwasaki handed down in the Draper case could have a big impact as the state wends its way through hundreds of lawsuits involving foreclosures, loans on properties for more than they’re worth and predatory lending practices that led Utahns to lose their homes as the real-estate bubble burst.

Read the rest of the story here

Interesting that some people are getting hot and bothered about this as if it was unjust to the investor (which, no doubt it is; except that the investor clearly never even looked at the documentation underlying the investment any more than the party selling the investment bothered to complete the transaction correctly…)  It seems perfectly right to us that if everyone is so sloppy in their dealing that thair dealings are thereby illegal and void then they are getting, as Denninger says, their just desserts.

It’s time for the financial markets and the financial sector in general to be cleaned up. Until that happens this will not be the end of these occurances, but is most likely only the beginning…

 

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