Utah’s “Quiet Title Law” Bypasses MERS, Awards Homes Free and Clear; One Homeowner Had $417,000 Debt Erased


The Salt Lake Tribune has an interesting article on Utah’s “Quiet Title Laws”, MERS, clouded titles, and record keeping. Several people won titles free and clear to their houses or condos when debts as great as $417,000 were dismissed in court. Here are a few snips.

A Utah court case in which the owner of a Draper townhouse got clear title to the property, even though he still owed $132,000 on it, raises new legal and financial questions about a property-records database created by mortgage bankers.


The award of a title free of liens means that whoever owns the promissory note on the Draper property — likely a group of faraway investors — no longer has the right to foreclose to collect on a delinquent loan. Indeed, the townhouse owner has sold the property and kept the money. Those who own the promissory note probably don’t even know what occurred.

Last year, the owner of the Draper property contacted attorney Walter T. Keane to help him deal with lenders, though Keane won’t say what the problem was and the owner declined an interview request.

The lawsuit over the title to the townhouse named Garbett Mortgage and Citibank FSB as the holders of promissory notes as recorded on trust deeds filed with the recorder’s office. Integrated Title Services was listed as trustee of the Garbett Mortgage trust deed, while First American Title was the trustee of the CitiBank trust deed.

But there also was another entity listed on the trust deeds called the Mortgage Electronic Registration Systems (MERS). The Mortgage Bankers Association, the Washington, D.C.-based trade group that represents major mortgage lenders, created MERS in the mid-1990s.

Under the state’s quiet title laws, Keane said he did not have to name MERS or serve it legal papers in the lawsuit because it was not the legal owner of title to the property. Those were title companies. In addition, attorneys contend, MERS cannot be the “beneficiary” or holder of the promissory note because it readily has admitted it has no financial interest in any notes or mortgages.

What happened next is easy to explain. First American did not know who could collect payments. Nor did Garbett Mortgage who told the court it had no interest in the property. Integrated Title withdrew as a trustee.

After four months of waiting, 3rd District Judge Glen Iwasaki awared the title free and clear to Keane’s client. According to the article, Keane has two other successes.

Moreover, another attorney, Abraham Bates got a “Quiet Title” on a home where a whopping $417,000 was owed. In that case, Bates named the original lender and trustee. Like attorney Keane, Bates said it was not necessary to serve MERS legal papers.

Please see the article for other interesting details.

Over 100 Lawsuits In Progress

Bates said he has more than 100 lawsuits pending over MERS-related questions and has hired more attorneys for his firm to handle the increasing load.

Rulings have gone different ways in different courts. But Bates said he and Peterson are teaming up to appeal a recent ruling by U.S. District Judge Tena Campbell that dismissed a lawsuit claiming MERS did not have the legal right to initiate foreclosure proceedings.

The attorneys are appealing Campell’s ruling as it relates to Utah law to the Utah Supreme Court. A decision will help sort out the issues with MERS over whether it actually can initiate foreclosures even if it does not have any financial interest in the promissory note, Bates said.

A ruling favorable to the homeowner “would be an absolute tsunami in terms of foreclosure in the state of Utah,” he said.


If MERS is not able to start a foreclosure action, “then there will be a brick wall put up over all nonjudicial foreclosures prosecuted in this state,” Bates said.


So far, this is not every judge in Utah. I expect an appeal in the cases in the article.

I also expect to see someone ask for an injunction on these cases until the State Supreme Court settles the issue.

Travesty of Justice

Assuming these “quiet title” lawsuits are public, someone is going to quickly start watching every filing in Utah. That will add to the expense of doing business in Utah. Is that justice? In what way?

Should these decisions be overturned (and I hope they are), someone will be going after the assets of the winning parties.

In the meantime, every MERS related title in Utah seems to be suspect. Why would title insurance companies want to do business in such an environment? Is that justice? For who? In what way?

Some investor just lost $417,000 through no fault of his own. Another person who deserved to lose his house because of default just got one free and clear. Is that justice? In what way?

Certain people will be cheering these developments. Unfortunately, there is nothing to cheer about here. No justice was served by these rulings.

Mike “Mish” Shedlock

avatarMike 'Mish' Shedlock - Mish's Global Economic Trend Analysis posted Monday, January 17th, 2011.

1 Comment for “Utah’s “Quiet Title Law” Bypasses MERS, Awards Homes Free and Clear; One Homeowner Had $417,000 Debt Erased”

  1. When a note is securitized it is pooled with many loans into to a trust that can become a mortgage backed security. Securitization splits the notes and the deeds of trust. Once this happens the note is usually lost or destroyed. Many of these securities were paid off by bank bailouts, credit default swaps, insurance or were charged off and no longer exist. However, the deeds of trust are still with the county recorder. Therefore, banks are trying to foreclose on the deeds of trust without the notes using MERS as a front for their own ill gotten gain. They are literally trying to steal peoples homes when they have no standing to do so. Without the notes there is no holder and no mortgage but the banks are foreclosing using MERS as the beneficiary (holder) and worthless deeds of trusts when they have no standing. So in reality some investor lost nothing and the home owner got his home back instead of a bank with no standing who tried to steal his home.

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