The bank filed a foreclosure suit, won, took title, and sold the property to an independent third party. Now imagine that you are the third party purchaser – you bought a home from a bank that obtained title via foreclosure. You move into and live in the house you purchased from the bank at a foreclosure auction.  Then suddenly, the original homeowner, who owned the property before the bank foreclosed, has convinced a court that she still owns the property.  Incredibly, in light of the bank’s failure to correctly prosecute the foreclosure lawsuit, the homeowner is right –  she still owns the house.

The problem is created through a break in the chain of mortgage ownership. Until the 1980’s, most mortgages were loans between the homeowner and a bank, who lent the money directly.  More recently, the mortgage financing system transformed into an international system of securitization, with mortgage lenders packaging their loans into securities, bought and sold by investors like stocks. These transactions even split individual mortgages into sections, where each loan could have parts owned by different investment banks.

The transfer of ownership in these mortgage backed securities (MBS) was done with contracts on the balance sheets of Wall Street investment banks, such as Morgan Stanley and Goldman Sachs. The company who originally appeared to make the loan was normally a retail lending company such as Countrywide or Lending Tree, who typically acted as a sales company, and sometimes remained contracted to service the loan.

In the event that the loan goes into foreclosure at a later date, the then-current owner of the loan files the foreclosure and sells the property to a new owner, often at auction. The land records would show a deed of transfer from the investment bank to the new owner. This creates a break in the chain of ownership of the mortgage rights. In many cases, the transfer of ownership of the mortgage loan has gone from the original lender, through several owners, and then to the foreclosing bank, none of which is recorded on the property title history. Technically, the foreclosing bank has no recorded title rights to foreclose in the first place.

MERS announced it changed its procedures to require that an assignment of mortgage be filed prior to the start of any foreclosure suit. Typically, a mortgage is recorded in the public records with MERS as nominee for ABC Corporation. Invariably, when the foreclosure lawsuit is filed, it is not filed in the name of ABC Corporation it is filed in the name of Bank of America, JP Morgan Chase or some securitized trust – an entity with no relationship to ABC Corporation.

In most foreclosure cases, banks’ lawyers argue the plaintiff has standing if it is the “holder” of the Note (i.e. if it possesses the original note with a special endorsement in blank.) Many judges accept this position, no questions asked and thus, an assignment of mortgage is often viewed as irrelevant and superfluous.

Even if Bank of America, JP Morgan Chase, or the securitized trust has standing without an Assignment of Mortgage in the public record, ABC Corporation is still the mortgage holder of record. This means that even if Bank of America, JP Morgan, or whoever prevails in the foreclosure is the high bidder at the auction, acquires title, and sells the property to a third party, ABC Corporation is still the mortgage holder of record. What does that mean? Essentially, the entire foreclosure case was like a wild deed – it took place, but ABC Corporation can still institute a foreclosure lawsuit in its own name, as it would have priority over the bona fide purchaser who acquired title from the bank.

If ABC Corporation is the mortgage holder of record, and it is not named as a party in the mortgage foreclosure suit, and there is no Assignment of Mortgage, then the mortgage in favor of ABC Corporation still exists, even after the foreclosure, even after the auction, and even after the sale to the third party. The foreclosure happened, but as far as ABC Corporation is concerned, the foreclosure is irrelevant – it still has the mortgage.

To sum it all up, when purchasing your next Tampa home, especially in the case of foreclosure, it is very important to seek the advice of a real estate attorney and if possible, purchase title insurance when you purchase a property.

While these ladies may be some of the most fabulous in Tampa Bay, they mean business (with frequent side orders of fun, of course).  The Smith & Associates Title, Inc. is an attorney-operated, full service company dedicated to providing exceptional real estate closings to sellers and purchasers throughout the state of Florida.

According to President, Angie Comas, “Our goal is to ensure that the real estate transaction proceeds flawlessly from opening to closing. This is accomplished by harmonizing our technology with traditional, time tested processing methods. In addition to our highly knowledgeable staff, we offer a level of exceptional customer services that the Smith & Associates customer has come to expect.”

Let’s meet the Smith Title girls that will be closing your next Tampa home:

Angi Comas, President
Angi Comas immigrated from Vietnam and landed directly in South Tampa, where she has resided since 1982.   Angi is almost a “native Tampanian” in that she attended primary schools throughout South Tampa and college at the University of South Florida. After spending three years in law school at Florida State University, she longed to come back to her South Tampa home. Although Tallahassee is a charming city, she missed driving on Bayshore Boulevard and walking around in Hyde Park Village. In 2009, Angi Comas joined Smith & Associates Title.   If Angi is not in the office, you can find her in her closet – organizing it.

Julie Simmons, Closer
Julie (or Ms.  Simmons, as she occasionally likes to be called) relocated to the Tampa Bay area in 2002 from her home-town of Pensacola, to begin her career in the field of title insurance.  Julie now calls St. Petersburg home (blocks away from our Beach Drive location).   Around the office, Julie Simmons can spotted wearing a cardigan sweater and a Smith & Associates name tag – the two most important elements of her signature look.  In addition to her passion for title insurance, Ms. Simmons enjoys running, kayaking, ballroom dancing and spending time with her beloved eight year old boxer, Dirce.

Aureann Whalen, Closer
At the age of fourteen, Aureann began her title insurance career by making microfilm copies for her father, a title insurance examiner, during the summer break.  Aureann’s mother is a title insurance marketing representative and so,  Aureann was destined to be in the title insurance industry. In addition to her extensive experience as a closer in South Florida and in the greater Tampa Bay area, she closed many of the sales transactions for Grand Key in South Tampa.  Aureann speaks fluent Spanish and has a penchant for all things that are sparkly – just like her personality.  When she is not working on closings for all of our agents, Aureann likes to play golf and go to the beach.

Sara Houze, Post- Closer
Sara Houze is a post closer at Smith & Associates Title.  Although her official duties are to handle the files after the closing, Sara is also our  technology expert. Furthermore, she inspires all of us in the office with her environmental consciousness. In our efforts to become a more “green” company, Sara has taught us that almost everything can be recycled, including packaging materials, electronics and even shoes. One of Sara’s favorite pastimes is extreme-couponing – it is amazing what she can do with $100!

Whether you are looking for beautiful ladies, massive amounts of coupons, fashion tips or the most efficient closing of your life, Smith Title is who you need on your side.  Wonder women really do rock stilettos!

Have you recently purchased a Tampa, St Pete or Belleair home?  What kind of experience did you have with the Title company?

Possible Credits For A Hillsborough County Home:

- Burglar & Fire Alarms
- Course of Construction Credit
- Guard Gated
- External Perimeter Security
- Wind or Hail Exclusion
- 24-Signal Continuity
- Sprinkler System With Flow Alarm
- Perimeter Protection Gate
- UI Approved Lightning Protection System
- Gas Leak Detector
- Full-time Caretaker
- Back-Up Electric Generator
- Residential Sprinklers
- Temperature Monitoring System
- Approved Storm Shutters
- Approved Impact Resist Glass
- Well Designed Plywood Shutters

In addition to these possible savings for your policy, additional portfolio credits for private collections and excess liability or flood coverage are also available.  Savings can also be found by means of safety equipment discounts on automobile coverage, and multi-car discounts.

Baldwin Connelly representatives also stressed the importance of having every Hillsborough County home, as well as those in Pinellas and Pasco counties, evaluated by performing a wind inspection.  This inspection, and the consequent filing of a Uniform Mitigation Verification form with your insurance provider, identifies the possible insurance savings available to you based on the current structure of your home.

For information on contacting Baldwin Connelly, please refer to the Smith & Associates Real Estate preferred vendor list.