All property titles commercial or residential are tracked through public records kept by the County recorder’s office of the county in which the property is located. In conventional loans before the era of “securitizations” this was easy. Your name appeared as the owner and the bank was shown to have a lien on your home, sometimes with a copy of the promissory note attached to the security instrument that was recorded in the county records. Thus the title records at the county recorders office would show the Deed to you and the mortgage or deed of trust in favor of your lender, about whose identity there was no doubt.

It appears that in most cases, at the very least there are many irregularities in the chain of title both as to deed and encumbrances that were caused by the actual events that occurred --- because they conflict with the public records on file --- both as to title and securitization.

Where there is a question about title, it is called a “Cloud on Title” and usually can be fixed by getting the signature of some authorized entity or person that is missing from the chain of title. This correction might not be possible with loans that are claimed to have been securitized and especially where the originating loan documents do not describe the real events in the transaction wherein the homeowner received a loan from an unidentified creditor.

This matter is also in litigation and is being developed as title companies are analyzing their prospective liability on title policies they already issued and as they analyze the underwriting risks of issuing new title policies on properties that had recorded encumbrances that might not be valid or which were not transferred properly. It may be the case that only a signature from the original borrower on a new document can “fix” the cloud on title and that this might extend back as many as three or four owners or three or four previous “lenders”.

Since borrowers are not likely to sign any such documents given current market conditions, the “cloud” becomes a title defect because it cannot be fixed in any manner. Whether the title is clouded or defective it would appear that the title might be classified as “unmarketable” which is why many homeowners are filing lawsuits to clear title. These lawsuits are called Quiet Title Actions.”

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