Making Assignments in the Dark

Editor’s Note:  In this industry article, Nationwide Title Clearing, Inc. insinuates that a bank should obtain a chain of title report before assigning a note to ensure that the manufactured paperwork creates the appearance of a clear chain of title.  Although the article doesn’t mention exactly how to cure any chain of title issues, it would appear NTC is recommending that banks invest in a report so they don’t make accidental and expensive errors by creating a defective assignment that doesn’t mesh with the public recordings and results in the loss of a home or lawsuit.

Making Assignments in the Dark

The chain of title is the guy-wire that holds the home finance industry upright. Without some method to determine who owns a given parcel of real estate, it cannot be used as collateral for a loan. In cases where these loans go into default, a clear title is essential for a smooth foreclosure and REO process. Unfortunately, problems arise that cloud the title, increasing loss severity for investors.

This occurs all too often. A case in point is provided by a transaction in California in which Washington Mutual (now defunct) made a $620,000 loan to a person named Sciarratta, which later went into default. When the dust cleared another top 10 bank had acquired WaMu’s assets, including this problem loan. It would later experience a complete loss on this transaction due to a simple but surprisingly frequent event that could have been easily avoided had better information been available to the lender.

There is nothing very strange or exciting about the law relied on by the court in Sciarratta. What is unique about the case are the facts on which it was decided.

The bank first assigned the Deed of Trust, including all its rights, to Deutsche Bank on April 24, 2009.

Three days after the assignment to Deutsche Bank, the Trustee (CRC) recorded a Notice of Default, identifying the bank as the successor in interest of WaMu. There was no mention of the Deutsche assignment.

In an apparently unrelated move, the plaintiff homeowner then sued the bank, Deutsche Bank, and the Trustee (CRC) for quiet title.

The bank then, a bare seven months after the Deutsche Bank assignment, purported to assign the same Deed of Trust to Bank of America (BofA). On the same day, the Trustee (CRC) recorded a Trustee’s Deed upon Sale, identifying BofA as the “foreclosing beneficiary” in exchange for a “credit bid.” This was the first of the void assignments.

The following month, the bank attempted a “corrective” assignment of the same loan to BofA, effective as of the date of the original assignment to Deutsche Bank. This, of course, is also a void assignment. There was, naturally, no mention of the Deutsche assignment.

The court held that Sciarratta had standing to question the bona fides of the assignment to BofA, because the assignment was void, not merely voidable. In so holding, the court relied on the outcome in Yvanova v. New Century Mortgage Corp., a 2014 decision of the California Supreme Court that held a foreclosure by a third party to be actionable. BofA actually had no interest at all in this loan, and was definitely not (notwithstanding the allegation in the Deed upon Sale) the Beneficiary of the Deed of Trust. The assignment of the property to BofA was therefore void, so it did not acquire title to the property. It did not take the land. It took nothing.

The striking reality of this case is that all these undesired consequences could have been avoided had the bank “known” about the assignment to Deutsche Bank when it attempted to assign this Deed of Trust to BofA. A simple report disclosing the contents of the public record before the assignment to BofA would have prevented the costly error of attempting to assign the Deed of Trust a second time.

The cost of such a report—and Nationwide Title Clearing, Inc., uses its own AVX report as an example—is not negligible, but with a population of loans a bank has acquired from another, for example, it is definitely warranted, especially given the fact that the bank in this case lost $620,000 on Sciarratta alone. Entities that are considering the purchase of someone else’s loan portfolio might in many circumstances consider factoring into the purchase price the cost of such a report. The knowledge obtained would act as useful insurance.

The same risk would be present in a large bank that owns a large portfolio but also employs enough people that someone else within the bank could assign a loan without it being general knowledge. In the Sciarratta case, for example, the confusion within the bank over who was the appropriate assignee arose entirely from within the bank. It was not another entity that assigned to Deutsche Bank, but likely another department within the bank.

The same issue could arise in the context of a release of lien. If the release were inadvertently signed on behalf of the wrong entity, it might raise the issue of whether the release is effective, and thus might cloud the title of the subject property. This could result in statutory penalties in many states, and to demands for the correct release from the homeowner in most of them.

Executing an assignment without first knowing what the loan’s title history looks like is akin to working in the dark. If the financial institution does not have sufficient resources internally to acquire this information, reports that cover the public record are available to provide that security.

Myron Finley is Chief Legal Officer for Nationwide Title Clearing, Inc., Palm Harbor, Florida.

14 Responses

  1. All a transfer of declared default debt – not a mortgage. Was not a mortgage at refi. Debt transferred by assignment.

  2. Assignments that sign over notes and mortgages cannot be signed back over to the original lender by an Allonge that states pay to XXX. Paying them doesn’t mean they own the paperwork. When an attorney states in the foreclosure complaint that the lender owns the note and mortgage (after it was assigned) he is committing fraud on the court. So much fraud in Official Records and no one cares… but I care.

  3. I am not sure how the info I found on the documents can be used to stop a foreclosure/ejectment action or reverse a post foreclosure. All documents I have examined are from various county courthouses in many different states and have the county’s bar code stamp, instrument number and other identifying information for that county recorder’s office. Anyone with an idea as to how they might use said info if they were in a similar situation.

  4. After further investigating the signatures, I have found 7 different hand writing styles of the notary’s signature and 3 different hand writing styles of the signer of the document(s). The notary with 7 different hand writing styles has the same commission # and expiration date from 1 state. I been concentrating on signatures so much, I do not know how I missed the 2 different dates. The signer hand wrote 8/12/2013 and the notary hand wrote 8/14/2013. These are classic robo signers. They do not even read what they are signing, they only sign and date them the day they receive the documents

  5. I am looking at a document recorded in the probate office which is named as “ASSIGNMENT OF MORTGAGE” in which MERS inc. is assigning said mortgage as NOMINEE for COUNTRYWIDE HOME LOANS inc. its successors and assigns and grants, conveys, ect… and liens, rights due, ect… to GREEN TREE SERVICING LLC in 9/12/2013 .
    “How can this be done 5 years after COUNTRYWIDE cease to be?”
    BoA took over COUNRTYWIDE at a cost of 40 billion$ in 2008.
    Why have they not named Bank of America as successor of COUNTRYWIDE first and as NOMINEE of BoA on said document.
    Oh and the signers are “DANIEL THOMPSON” as asst, secretary for MERS and notary is “NICOLE BALDWIN” notary public State of Florida.
    Both are suspected of being ROBO signers according to internet search.

  6. Title search will not help. Will never be cleared. Foreclosure silences title but it does not fix it. And for those still paying – title will never be clear.

  7. While the article does indeed expose facts which undermine the ability of plaintiffs in foreclosure to claim title, it also proposes a solution that seems out of character for the banks. A $700 title search fee in each and every case. Since this all originated with banks’ attempts to avoid a $35 recording fee, it seems ironic.

  8. Any loan in a private bank entity trust, with a trustee, and a servicer, has a title issue. Never on anyone’s balance sheet — went straight to off-balance sheet “shell” conduit. All know that securitization is derived from ON BALANCE sheet assets,. So — where are those on balance sheet assets? Where did they come from? Why no balance sheet today? Whose balance sheet? Where did they originally come from?? Whose balance sheet today?
    These were refinances. Where did they come from???? From whose balance sheet?? To whose balance sheet did they go? None -only went to a “shell” off balance sheet “conduit,.” that is now gone. All in the accounting. Economies need to be saved, but not at the expense of the victims. Financial crisis was so great – there needed to be some that were not saved. And, this lives on.

    Need an investigation. Never had. Forget the trivial political stuff. Special Counsel? Needed..

  9. There are TWO Merscorp Holdings Inc f/k/a Merscorp Inc,
    1.Merscorp Holdings Inc f/k/a Merscorp Inc[ File No. 5034916 incorporated on 09/22/2011] The both have two seperate Registered Agents with different agents,[Registered Agent RL & F Service Corp 920 N King St. Fl-2 Wilmington New Castle DE 19801 https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx
    2. Merscorp Holdings Inc f/k/a Merscorp Inc, [File No. 2915165, incorporated on 06/30/1998]Registered Agent, “The Corporation Trust Company”, (CTC) Corporation Trust Center 1209 Orange St. Wilmington New Castle DE 19801 See https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx
    There are TWO MERS also’
    1. Mortgage Electronic Registration Systems , Inc, (“MERS”),[ File No. 2543543 incorporated on 01/01/1999 ] Registered Agent, “ The Prentice- Hall Corporation System Inc”, (PHCS) 2711 Centreville Road Suite 400 Wilmington New Castle DE 19808 Registered Agent, “ The Prentice- Hall Corporation System Inc”, (PHCS) 2711 Centreville Road Suite 400 Wilmington New Castle DE 19808 See https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx
    2. Mortgage Electronic Registration Systems , Inc, (“MERS”),[ File No. 2990193 incorporated on 10/16/1995] Registered Agent, “The Corporation Trust Company”, (CTC) Corporation Trust Center 1209 Orange St. Wilmington New Castle DE 19801. See https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx
    All of the above 04 havesame stock, Directors and Principal Officers, consumer confusion is profuse, and discovery tightly guarded to obtain justice. The confusion exists because marks, names are similar; goods and/or services for which they are used are same will create consumer confusion. No Coexistence-Agreement in place, or disclosed to us. Their own Counsel is not informing court which one he/she represents. Court must take judicial notice of this misrepresentation of the officer of the court, but THE COURTS are side stepping all of us and siding with the syndicate of thieves
    THERE MUST BE TWO /FOUR of the Merscop/MERS SIDESTEP, Inc too.

  10. Can Countrywide Home Mortgage assign servicing rights to any entity after 2008, say in 2013?

  11. Re-creating missing assignments will not work to win the day for these interlopers, once it’s understood that ALL ASSIGNMENTS to a securitized trust entity benefiting from having a REMIC status, (Internal Revenue Code (IRC860D)), must’ve been completed within (120 days) of the loan’s “origination.”

    (IRC860D) makes clear, that the securitized trust entity MUST BECOME the “taxable-owner-of-record” by the startup-date of the trust.

    After that “startup-date” … ANY & ALL (“AOM’s”) recorded assignments of mortgage (or, deeds of trust) violates federal law, and, is a class-3 felony, in California.

    NTC … cannot create assignments with proper Date/Time Stamps, which could be used to prove their false narrative, once the information (above) is thoroughly understood.

  12. Nationwide “produces 1-2,000 Assignment of Mortgage documents a DAY. It makes no attempt to validate or verify data received from client NA Banks eg Chase.It utilizes its own employees to execute under a rubric that they are also VP of client Bank pursuant to a Bank Directors resolution never made available for inspection. The Chase Executive Committee refuses to confirm. They utilize a known robosigner notary in Louisiana and refer to a Chase office in Monroe La I think I have stirred interest by the DOJ Mortgage Fraud Task Force and the FBI
    A Nationwide competitor was just placed under a Consent Order

  13. OK Where is Chase in this example??? This article said “When the dust cleared another top 10 bank had acquired WaMu’s assets, including this problem loan.” Are they talking about 9-25-2008? If so, what do they mean with the following : “The bank first assigned the Deed of Trust, including all its rights, to Deutsche Bank on April 24, 2009” WHAT BANK assigned this to DB? – was it WAMU? FDIC? or Chase?? If it is WAMU or the FDIC this story has bigger implications suggesting Chase DID NOT GET ALL THE WAMU ASSETS!

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