When discussing mortgage assignments it’s important that we know what an Assignment of Mortgage, or Deed of Trust (respectively) is and what it supposed to be done with one. After all, if a mortgage assignment was not somewhere, somehow legally required by somebody then they simply would not exist.
Things to keep in mind: Not all states have a statutory requirement to record mortgage assignments; Negotiable Instruments (Note) are “negotiated” and “transferred”, not ‘assigned’, as where Security Instruments (Mortgage/Deed of Trust respectively) are “assigned” not ‘negotiated’ and ‘transferred’.
In regard to specific state requirements to file assignments we see for example in Alabama, “We note that there is no statutory requirement in Alabama that an assignment of a mortgage be recorded in a probate office before an assignee may institute foreclosure proceedings.” App Court Opinion; Sturdivant v. BAC HOME LOANS SERVICING, LP, No. 2100245 (Ala. Civ. App. Dec. 16, 2011).
However in Texas for example we find Texas Local Government Code § 192.007(a) in where it states, “To release, transfer, assign, or take another action relating to an instrument that is filed, registered, or recorded in the office of the county clerk, a person must file, register, or record another instrument relating to the action in the same manner as the original instrument was required to be filed, registered, or recorded.”
In this manner Texas requires its property records to be kept accurate and up to date.
In states that have recordation requirements such as in Texas the results of a party’s neglect to record assignments are five fold,
1. A party’s negligence places a ‘cloud’ on the title to real property.
2. Said party had compromised the integrity of the County Recorder’s Office.
3. Said negligence is a violation of Texas Local Government Code § 192.007(a), or the equivalent statute of sister states.
4. Said violation is a breach of a uniform covenant of a Mortgage/Deed of Trust.
5. By virtue of breach, a party claiming the authority to act upon an instrument has defaulted on the contract (Mortgage/Deed of Trust).
If you are not familiar with the legal term “cloud on title” I go into greater detail explaining this concept in my article titled, “Quiet Title Actions”.
The County Recorder or Registrar has a duty to protect the integrity of his/her office and cannot knowingly allow the recordation of fraudulent instruments, in fact in most if not all states it is a crime to even knowingly offer a fraudulent instrument for public recordation (in Texas see: Texas Government Code § 51.904), nor can a County Recorder or Registrar condone the failure or neglect of a party to comply with a state’s statutory recording requirements. If the clerk of the County Recorder’s Office were to permit either then the purpose of that office is null.
If your property is located in a state that does have statutory recording requirements, the failure or neglect of a party to properly record an assignment of Mortgage/Deed of Trust is a direct breach of the “Governing Law” clause found in all Security Instruments pertaining to real property. I go into greater detail regarding this issue in my article titled, “Breach of Contract/Covenant 16 and Footnote on 3 yr-old TILA RESPA Claims”. and also in another article titled, “Default: Who’s In First Place?”
The failure or neglect to file assignments is all too common, particularly since the advent of Mortgage Electronic Registration Services (MERS) which is a electronic document repository (library of sorts) for electronic copies of mortgage loan related documentation, and is solely for the convenience of the investors and banks that deal in commercial paper.
MERS was instituted by at least 5 major mortgage banks, under the guise of making record keeping more proficient for sake of the investment markets, and claims to be an “official” medium of recordation, thus replacing several states public offices in an attempt to circumvent state’s statutory requirements, and to avoid having to pay fee every time a Mortgage/Deed of Trust is assigned to another party. These fees were cutting into the banking industry’s bottom line and something had to be done, or so the major banks thought.
By circumventing the filing fees, MERS has deprived counties all across the country of incalculable billions of vital revenue dollars, thus making it harder on the counties to meet the expectations of the citizens. This failure results in a greater burden on the citizens of these counties to make up the lost in revenues, and by that means every citizen in the county has been damaged whether they have a mortgage or not.
This very issue has been the subject of many lawsuits against MERS in Texas and other states. For example see: Nueces County, Texas, v. MERS et al in the US District Court, for the Southern District of Texas Corpus Christi Division under Cause No. 2:12-CV-00131, and Dallas County, Texas, et al v. MERSCORP, Inc., et al in the US District Court for the Northern District of Texas, Dallas Division under Cause No. 3:11-cv-02733-O.
What I think we should see from the banking industry’s blatant disregard for states’ statutes is the far broader and deeper level and range of harm that this nation has witnessed before we bring that perspective home to our individual situation.