This has probably been discussed ad infinitum....but I just haven't been staying current.

I am buying a "short sale" property in AZ. I have it in writing from both Chase (1st) and PNC (2nd) that they will sign off on the outstanding loans. However MERS was named as nominal trustee during resale in 2004. When a trustee sale was to take place on Aug. 9, 2011 after the borrower defaulted the Notice of Substitution of Trustee included this paragraph.

"U.S. Bank National Association, as Trustee, successor in Interest to Bank of America, National Association as Trustee as Successor by merger to LaSalle Bank, National Association as Trustee for Washington Mutual Mortgage Pass-Through Certificates WMALT 2005-1 by JPMorgan Chase Bank, National Association as attorney-in-fact".

The Notice of Substitution of Trustee was signed in Los Angeles County. The loan number on this form matches the loan number on the written release from Chase. As expected, the title officer says she has no way of tracking any other assignments made through MERS and that we will have to rely on the title policy being issued by Fidelity if there is a problem. She said she has been doing short sales for 3-4 years, this is all perfectly "normal" and they haven't had any problems "yet".

I guess my short question is "can I do anything to protect myself from being victimized by a multiple assignment?"

For whoever may be interested in this stuff, here's a brief summary of what I have experienced with short sale. I am still closing tomorrow because I got "lucky" and was able to purchase way under market, however the process as many know is "troubling" for many reasons. Most surprising is that the listing agent, and many other agents, didn't even know what MERS was. The well respected manager of the title agency who handles a lot of closings in this area only knew about MERS tangentially...mainly to determine the current servicer. Nobody was even marginally interested in knowing whether the loans had been securitized and/or assigned.

A friend advised, as does the MERS site, that the 18 digit MIN (mortgage investment number) could be used to get the entire history of a loan. That proved not to be true. Search only found original loan that was "inactive". I followed up with email and somebody from MERS did respond at once but only to confirm that the only thing you could find out via MERS is the current servicer. After closing I will be following up, for the title officer, with the contact person at Chase who is supposed to be the servicer, owner of the loan and recipient of our funds wire. I will be curious, to say the least, to hear what she has to say about securitization of the original loan and who received my funds. I will be issued an "unencumbered" deed but can't understand why. Feel more like someone bought a "title default swap" to "protect" everyone, facts be damned.

Buying title insurance I assume?

Of course, through Fidelity who is owned by Chicago Title. I was trying to make the point that title insurance may be as worthless as a CDS with an uncapitalized counter party. Just as CDS were providing psychological "cover" to remove debt from balance sheets, I am wondering if title insurance may now be just be providing "cover" for using MERS rather than county recorders, i.e. who cares if you can't determine who owns a loan.....it will all be made good as long as there is a policy of title insurance. As expected, that is exactly what the manager of the title office told me I could rely on after she had to admit she had no idea who owned the original loan and whether the funds wire transfer was going to the owner. All she can say is that it is going to the servicer and it is up to the servicer to get it to the owner. I wasn't even convinced she knows who the actual servicer is.

It would be so cool to investment banks, and I don't put anything past them, who were paid when loans were securitized to also receive proceeds from "short sales" even if they may not own the loans and is that possibly the reason the short sale went through at such a low price? Maybe title insurance will blow up only after successful lawsuits expose multiple securitizations and the difference between the liabilities they are creating for title companies and their capital, eg. CDS and AIG?

The investor/loan owners recorse is against the servicer and the issuer of the CDO.

The owner signed a deed to you. Who is going to challenge the sale?

Glad you got a good deal enjoy your home.

yeah i agree with Sunriser.

I myself bought a shortsale in 2009.

The time to challenge these things is the people getting foreclosed on. Short sales actually allow them to have the debt forgiven, they have no reason to challenge it.

Nobody else except the previous owners would challenge a sale. If its a short sale, they are sort of benefiting from the deal, so don't know why anyone would do that.

Thanks for the feedback and I agree. However, having been on TF for so long I can't help looking for a nefarious motive that let this happen. All parties to the transaction had an incentive except the owners of the loans, especially if they were aware of an identical unit that just got multiple offers above a listing price 30% higher than what I paid. The servicer and loan owners can't really be that uninformed and/or stupid, can they?

Rutben, in the last 4 months, we've bought a foreclosure and a short sale. I was very comfortable with the short sale. We received a Warranty Deed with the short sale and, as others pointed out above, there are few reasons for the previous owners to eventually challenge the transaction or their original mortgage. (Yes, I too am always looking for the nefarious motive). Fannie Mae's contract on the foreclosure said we would get a Quitclaim Deed, which wasn't acceptable, but they wound up giving a Special Warranty Deed, which was somewhat better. Still not a Warranty Deed, but I can live with it.

It helped that I was also able to see via property records that the short sellers were unloading a portfolio. Even less reason, in my opinion, to challenge anything. They were unloading hundreds of thousands of dollars of bad debt and walking away pretty unscathed.

For the foreclosure, I was able to see that the previous owners had walked away and bought new construction that was twice as big, out in Gilbert. They had clearly walked away and knew what they were doing. I considered them to be a low risk on challenging anything as well.

Good luck with the new property. We're actively looking for more but are having a hard time competing against cash.

By the way, I don't discuss MERS or any of this crap with the Realtor or the loan officers. I know what I'm looking for, and if anything looks funny, I challenge it. Beyond that, they either don't know or aren't interested in the "problems" of the housing market. It's their living and their prerogative. I've learned on TF to simply educate and watch out for yourself.