5 ways property ownership is impacted by economic instability

1. Foreclosure records filed in bulk, can affect innocent properties

As millions of properties enter foreclosure, lenders are more frequently recording the foreclosures on title in bulk recordings. The agent for the lender will prepare hundreds, sometimes thousands of foreclosure notices in on batch, and bring them to the county recording clerk for entry in the official records.

By doing hundreds of documents at once, it becomes likely that a neighboring property not actually in foreclosure can inadvertently become the target of a filing. The property legal descriptions and parcel numbers from one property to the next are different only by a few words or numbers. If these numbers are transposed or mistyped, an innocent homeowner, whose payments are current may find their property title in foreclosure.

2.  More debts and liens become property encumbrances

As the economy experiences crisis, more debts become owed by individuals and companies. The creditors look for any avenue to enforce their debt, and owned property becomes a more likely choice, as available cash is depleted. A delinquent credit card, past due taxes, or even a bank debt due to a bounced check used to be collected through garnishment of wages or other cash. Creditors have become more likely to place property liens quickly, to protect their interests.

3. Lending company turmoil results in unreleased mortgages

Mortgage lenders are closing, becoming insolvent, and merging at a very fast pace. The largest retail mortgage lender, Countrywide, was recently purchased by Bank of America. Golden West, a large west coast lender, was purchased last year by Wachovia. Wachovia, in turn, is being absorbed by Wells Fargo and Citicorp. While the original mortgages from Countrywide and Golden West will remain valid, the problem arises when one of these mortgages is paid off or refinanced. The actual account may have a zer balance, but the mortgage lien remains on title until a release document is filed by the lender with the county recorders office. The original lender is not in business to record the release, and the new parent company may not be able to do so, until it can prove vesting in the mortgage instrument. The volume of unreleased mortgages is skyrocketing, and the number of paid of mortgages still showing on title is a significant problem for homeowners.

4. Investors in mortgages fail to record assignments

A related problem is missing assignments. As an individual loan or package of loans is transferred from one lender to another, the ownership of each mortgage should be recorded on title. Many new owners of mortgage instruments do not record an assignment immediately, if ever. This puts interested parties, and the homeowner, unable to contact the actual owner of their mortgage should it be necessary for a payoff quote or workout. The overall accuracy of mortgage ownership is currently very poor. Because of this, understanding the true nature of the mortgage status of an individual property, or many properties in general is difficult at best.

5. Higher volume of recordings raises probability of errors

At the county recorders office, a higher volume of documents is being presented for recording. As creditors pursue liens, and mortgages are transferred, the document count is high. At the same time, municipal budgets are under stress from decreased county revenues. The result is less people to do more work. County recording offices are some of the best run information collection systems in the country, but an overworked understaffed system is bound to end up with recording errors. This could mean property ownership and title status for some properties being incorrect.

In general, the national financial crisis affects property ownership in many ways. As banks collapse, consumers are financially strained, and companies collect and owe debts. These and other symptoms of the crisis each make property title records less accurate overall.