Most frequent questions and answers
The chain of title has considerable significance in real estate. In a real estate transaction, chain of title is researched on behalf of the consumer borrower, or buyer, by a title service firm, which summarizes all title conveyances, or transfers, and encumbrances in a title report. Title insurance is used by prospective buyers to protect against financial loss resulting from legal errors in the title report.
Numerous local government registration systems, such as the Torrens title system, have been established to track the ownership of a single lot of real property. In the US, the transfer of land issued by the title insurance service industry is based in the historical chain of title to the real property. Land title insurance firms thus sometimes maintain private title tracking of real estate titles, in addition to local government records. In other cases, the historical chain of title is created by an abstract of title, which is sometimes, although not always, certified by a licensed attorney.
Widespread lack of transparency in chain of title has resulted from a collective decision made by countless entities in the business industry in 1995: namely, the decision to use the electronic National Mortgage Rights Registry system to enable the registering, buying, and selling of electronic mortgage notes without registration of changes of ownership with local governments.
To utilize electronic tracking, the third-party servicer of the mortgage loan assigns it a mortgage identification number (MIN) and then registers the loan with the electronic National Mortgage Rights Registry electronic database. From there, the seller can originate the mortgage as well as initiate trading among database members designated nominees of the beneficiary. Finally, the seller assigns or records the assignment of the loan to the electronic National Mortgage Rights Registry in county public land records, making the electronic National Mortgage Rights Registry the mortgagee of record.
If the lender sells the promissory note, the electronic National Mortgage Rights Registry will update its information regarding the mortgage and purports to notify the buyer. The third-party servicer of a mortgage loan can have it removed from the electronic National Mortgage Rights Registry electronic database by sending a request to have it deactivated. The electronic National Mortgage Rights Registry will, in turn, notify the investor (e.g., Freddie Mac, Fannie Mae) of changes made to the promissory note. If the third-party mortgage servicer who controls the promissory note and the underlying collateral (i.e., deed of trust, or mortgage) wants to end their membership with the database entirely, they must notify the investor as soon as possible.
Cadastre: (1) a survey and valuation of real estate in a county or region compiled for tax purposes or (2) a public record, survey, or map of the value, extent, and ownership of land as a basis of taxation.
Legal cadastre: Parcel-based description of interests or rights in real property typically supported by titles or deeds and registry.
Functions of a legal cadastre:
Define property rights, including those in conjunction with formal and case law
Describe the extent of property rights, both spatial and temporal
Support land conveyance (i.e., transfer)
Provide evidence of ownership (g., using land as collateral)
Administer programs (g., enforcement of laws, incentive targeting)
Overview public land management performed by local governments
A child parcel is created when the registered or “parent” parcel identifier is split, divided, or otherwise changed, resulting in an altered number of parcels.
The registered parcel describes how the parcel originally existed before any split, division, subdivision, or combination that created a change in parcel boundaries.
A plat map is generally drawn after a property has been described by some other means, such as a government survey system. Once a plat map is set, legal descriptions are defined in reference to the given map using the lot and block survey system.
A purchase-money mortgage is a note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate. It is a method of financing a home in which buyer borrows from the seller instead of, or in addition to, a bank. It is sometimes used when a buyer cannot qualify for a bank loan for the full amount. It may also be referred to as seller financing or owner financing.
There are generally two types of purchase money mortgages: (1) a mortgage given by the buyer of property to the seller to secure the balance of the purchase price (“seller take-back” loans) and secured by the property being sold (i.e., not by some other property); or, (2) A “third party” purchase money mortgage, given by lender to secure a loan which was used to pay all or part of the purchase price on the dwelling occupied totally, or in part, by purchaser. A purchase money mortgage involves the owner’s/borrowers’s risk of losing the property and the foreclosure’s impact on the owner’s credit.
A map of a town, section, or subdivision showing the location and boundaries of individual parcels of land subdivided into lots with streets, alleys, easements, and other relevant objects or structures generally drawn to scale.
Sometimes called real estate, real property refers to land and all articles permanently included within it (e.g., buildings, trees). If an individual owns a house, he or she has a title to it. When the individual sells the house, he or she sells not only the real property, but also the title as an intangible right of ownership. A real estate attorney or agent, in turn, is responsible for ensuring that a title is successfully transferred from one owner to another. Real estate attorneys and agents also frequently assist the buyer with purchasing an appropriate level of title insurance
In 1995, financial advisors and others in the mortgage lending industry created a private, members-only electronic National Mortgage Rights Registry clearinghouse, also known as MERS, that tracked ownership and servicing rights for residential mortgages. This electronic database system was designed to facilitate mortgage securitizations and circumvent traditional local government recordkeepers (e.g., county-level recorders, registrars of deeds, county clerks, clerks of the court). MERS principal place of business is located at 1818 Library St., Ste 300, Reston, VA 20190-6280. Over two-thirds of all newly originated residential electronic promissory notes linked to mortgage loans in the United States are registered in the unregulated MERS® System.
State laws often limit a recording office’s ability to refuse potentially fraudulent deeds and instruments. The primary role of a local government recording office is to ensure that deeds and instruments meet the statutory requirements for recording. If a deed or instrument satisfies the local government’s recording requirements, then the recording office is generally obligated to record it. The office does not and often cannot verify the information outlined in the deed or instrument due to state laws that limit its ability to refuse potentially fraudulent records.
The introduction of electronic recording to the public land recordkeeping performed by local governments, rise in the trading of electronic promissory notes linked to mortgage loans registered in the MERS® System, and increased popularity of mortgage-backed securities were all significant factors affecting the 2008 housing crisis, which sent the US and global economies into the largest housing collapse since the Great Depression. Since the housing crisis, however, local government recorder offices have failed to develop mechanisms or enact laws to prevent paper and electronic recording fraud.
Mortgage Electronic Registration Systems, Inc., also referred to as the electronic National Mortgage Rights Registry or, more simply, the Electronic Agent, is owned by the privately-held corporartion MERSCORP Holdings, Inc. (formerly known as MERSCORP, Inc.) as well as its Delaware-based parent company Intercontinental Exchange, Inc. (ICE). Operating from Reston, Virginia, the electronic National Mortgage Rights Registry records electronic promissory notes associated with mortgage loans in a MERS® System database.
MERSCORP Holdings operates as a subsidiary of ICE and is owned by Maroon Holding, LLC; ICE is the only publicly held corporation that individually owns 10% or more of Maroon Holding, LLC.
The electronic National Mortgage Rights Registry is a members-only private entity with more than 5,500 MERS® System members, and provides a network that links the most significant players in the mortgage industry. These include government-sponsored enterprises, such as the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, the Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, as well as the Mortgage Bankers Association, various insurance and title companies.
MERS’s reported aim is to provide and maintain a registry of the transfer of mortgage servicing rights, ownership, security interests, and releases for use by those in the mortgage banking industry, including but not limited to mortgage originators, third-party mortgage servicers, warehouse lenders, wholesale lenders, retail lenders, document custodians, real estate attorneys and agents, title companies, insurers, investors, and county recorders. Further, since June 30, 2016, MERSCORP Holdings has been a member-based organization consisting of thousands of lenders, third-party mortgage servicers, subservicers, investors, and government agencies. All paper-based promissory notes have been replaced with the electronic equivalent, otherwise known as an eNote. Each eNote is electronically created, signed, secured, and then registered in the MERS® eRegistry, along with information on the original lender.
The series of conveyance paper deeds discovered via a review of local government public land records creates a “chain” that links landowners in concert through a series of residential and commercial real estate sale transactions (e.g., “Party A grants to Party B, Party B grants to Party C, Party C grants to Party D,” and so on).
A chain of title is the official public ownership record of a property or asset. Chain of ownership derives its name from its sequential nature: a chain of title traces historical title transfers from the present back to the original landowner. Given their critical importance in establishing ownership of a property or asset, rigorous and accurate title records are generally stored in local government registries or the electronic an electronic National Mortgage Rights Registry system. Moreover, a title to real property is evidence of a person’s right to, or interest in, that property: it is the means whereby the owner is enabled to assert or maintain his or her possession. The specific rights that the property owner holds are determined with reference to the manner in which his or her interest was acquired or the degree to which it was effectively transferred.