So wait, who owns my house now?
July 13, 2009 12:09 PM   Subscribe

We recently paid off our mortgage (finally!) and got a Substitution of Trustee and Deed of Reconveyance. Some of the info on it looks confusing and/or wrong. We've called the county recorder's office and Wells Fargo, and the people there said everything is correct, but they didn't seem too sure of themselves it just looks wrong. Here's the part I'm confused about.

Wells Fargo was the lender, and the paperwork reads as follows:
...Whereas, the indebtedness secured byt he Deed of Trust, described below, has been paid and satisfied; Now, Therefore, Mortgage Electronic Registration Systems, inc, it's address being (blah blah)...being the present legal owner and holder of the indebtedness secured by said Deed of Trust, does hereby substitute and appoint Wells Fargo Bank, it's address being (blah blah) successor Trustee, and the Trustee(s) under said Deed of Trust, having received from the Beneficiary under said Deed of Trust sufficient directive to reconvey, detailing that the obligation secured by said Deed of Trust has been fully paid and performed, does hereby reconvey unto the parties entitled thereto, but without any covenant or warranty, express or implied, all rights, title and interest which was heretofore acquired by said Trustee(s) under said Deed of Trust.
Original Trustor(s): me and my wife Original Trustee: Southland Title Original Beneficiary: Mortgage Electronic Registration Systems Inc as nominee for Home Loan Center

So, if I'm reading this correctly...apparently Mortgage Electronic Registration Systems (MERS for short) was the original deed holder? And they're transferring it to Wells Fargo?? Shouldn't it be transferred to my wife and I? Or, thinking about this again, is this maybe just step 1 in a multi-step process? Can anyone shed some light on this?
posted by edjusted to Work & Money (13 answers total)
Did you have a second mortgage with Wells Fargo?
posted by Happydaz at 12:18 PM on July 13, 2009

@Hugh2d2: haha now now, don't try to get me on one of those lists...

@Happydaz: nope. We only have/had that one mortgage.
posted by edjusted at 12:21 PM on July 13, 2009

MERS is a holding company for deeds--more or less; it was created to streamline the papertrail in mortgage-making as mortgage-making became fast & loose. Most mortgage companies are incapable of explaining MERS properly to their mortgagors. Given how MERS generally works, in your case, when your mortgage was made (& you bought the house & Wells Fargo gave you money to do so), MERS was nominally the owner of the mortgage (the indebtedness); Wells Fargo was also the owner of the indebtness (with the authority to foreclose the mortgage and the right to receive payments) & you became the owner of the house, subject to the indebtedness.

From what I can tell, based upon your transcription, what you have is not a step in the release process; it's a release of your indebtedness. From what I now about mortgage law, there is no intermediate step in the release process. You own the house (as you have since you bought it, actually), and you no longer own it subject to any priority lien or interest on the part of MERS or Wells Fargo as mortgagee.

Good on ya!
posted by crush-onastick at 12:48 PM on July 13, 2009 [1 favorite]

arg. Five previews and I left that glaring error in there. MERS is a company that exists soley to exist as nominee on mortgages not as a "holding company for deeds." Sigh. You have the deed to your house. Have all along You just haven't had it free and clear of encumbrances.
posted by crush-onastick at 12:51 PM on July 13, 2009

what crush-onastick said.

The deed to your house is not the same as a deed of trust. A Deed of Trust is what some states require instead of a mortgage.
posted by Lucinda at 12:56 PM on July 13, 2009

I am not your lawyer. I do not know what state you live in, nor do I know anything about your situation besides the langauge you have pasted here. To my reading, however, here is the key language (bolded):

successor Trustee, and the Trustee(s) under said Deed of Trust, having received from the Beneficiary under said Deed of Trust sufficientdirective to reconvey, detailing that the obligation secured by said Deed of Trust has been fully paid and performed, does hereby reconvey unto the parties entitled thereto, but without any covenant or warranty, express or implied, all rights, title and interest which was heretofore acquired by said Trustee(s) under said Deed of Trust.

The bolded language means that the deed probably trying to convey the property back to you.

Without getting into the hairy details of lien versus title theories of mortgage and the hybrids thereof (google those terms if you'd like to know), you live in a state that uses the title theory of mortgages. In the normal course of things, what would have happend when you got the mortgage is that you and Mrs. Ed executed a Deed of Trust. Check your records. It should have language to the effect of:

(i) you and Mrs. Ed don't really-really own the house anymore; instead, the bank does;
(ii) however the bank owns the house in "trust,"
(iii) because the bank owns it in trust, it doesn't get to sell the house or move in unless you stop paying the mortgage, and once you pay back all fo the mortgage, you and Mrs. Ed are entitled to become the owners of the house again.

My guess is that you borrowed money from HLC or a bank affiliated with them. At some point, HLC sold the right to be trustee and (more importantly) the right to get the money that you were paying to MERS, which is probably a subsidiary/affiliate of Wells Fargo. Now that you've paid it back, MERS is making Wells Fargo the "trustee," and because the terms of the Deed of Trust have been fulfilled, Wells Fargo is obligated to give the house back to you.

The language I've bolded above is what does it. To satisfy yourself that it's done it, you should check the Deed of Trust and make sure that you and Mrs. Ed are the ones who are entitled to get the house back once the mortgage has been paid off. Then, check that the info about the Deed of Trust "described below" in this new document you have from Wells Fargo, and make sure it matches up with your old Deed of Trust. Make sure the dates are right, for example, and if you and Mrs. Ed are named in that description, make sure they got the names as they're on the Deed of Trust. If you're feeling paranoid, check with the Recorder and make sure that the Deed of Trust got recorded under the same book and page number as in the new document you have from Wells Fargo. (That might cost a couple bucks.)

Again, I'm not your lawyer. I don't even know where you live, and it is eminently, eminently possible that Wells Fargo could've screwed this up, but like everybody else is saying (though I disagree with the 'you've always owned your house' stuff), this appears to be on the up-and-up. Nothing screams that MERS is trying to screw you.
posted by joyceanmachine at 1:11 PM on July 13, 2009

@crushonastick, @Lucinda, @joyceanmachine: Thanks! I see "Deed" and I think "ownership". I will doublecheck the Deed of Trust to make sure all is kosher. Thanks!!
posted by edjusted at 1:19 PM on July 13, 2009

MERS is not a subsidiary or affiliate of anyone. The Mortgage Electronic Registration System, Inc. (MERS) was created in 1997 by a significant number of "mortgage industry participants" (largely lenders) to streamline the paperwork, as the mortgage industry opened up and mortgages were increasingly bundled into securities packages and servicing (the collecting, processing and applying of mortgage payments. This is not necessarily done by the lender) to act as mortgagee of record, regardless of how often the mortgage was bought, sold, assigned. One must be a member to name MERS in a mortgage, but any actor in the real estate finance industry can be a member of MERS.

If your indebtedness has been paid off, the mortgage has been released. If MERS is nominee on your original mortgage, MERS must be listed in the release. But it's not a subsidiary; it's not an affiliate; it's quite likely MERS never "really" owned the indebtedness. MERS, however, probably always kept the papers. That way, if at any point, your original lender chose to sell the indebtedness, or a subsequent owner of the indebtedness sold it, and so on, MERS would have remained the mortgagee the whole time. MERS makes it much much much easier to get all the ducks into a row 1) when the mortgage is satisfied and released or 2) if the mortgage goes into default and is foreclosed.

I can tell you in gross boring detail (trust me, it's boring boring boring) how this works in a lien theory state. But you don't need to know.
posted by crush-onastick at 1:38 PM on July 13, 2009 [1 favorite]

Interesting. Thanks for the info on MERS, crush-onastick. I know a decent amount about the law regarding mortgages, but not much about the practicialities of modern mortgages.

From that article, it looks like HLC is probably a member of MERS, too. And not being an affiliate or subsidiary would explain why MERS would want Wells Fargo to be the one that actually reconveys to the homeowners, which is something that I was wondering about when reading the excerpted DoT above.
posted by joyceanmachine at 2:02 PM on July 13, 2009

Not an excerpted deed of trust above. Deed of Reconveyance. Gah.
posted by joyceanmachine at 2:05 PM on July 13, 2009

1) Get a lawyer to review your situation

2) Do not, ever, rely on the staff of a bureaucracy or a bank to understand the subtleties of your particular situation and provide you with accurate information. Their incentive is to get you off the phone and stay out of trouble with their manager. Your incentive is vastly different.

3) See number 1.
posted by dfriedman at 2:52 PM on July 13, 2009

I am not your lawyer.

What crush-onastick said. MERS is effectively a tax-avoidance scheme cooked up by the major players in the mortgage lending industry - it tracks deeds of trust and mortgage liens as they pass from holder to holder, so that each transfer doesn't require the payment of taxes that would normally follow.

MERS was, in effect, holding your deed for Wells Fargo, who was holding it for you, subject to your payment of the mortgage. The language in the conveyance you've posted looks consistent with that.

Hey, congratulations on paying off your mortgage - that's a huge accomplishment!
posted by mikewas at 3:44 PM on July 13, 2009

I read it, legalese translated, as this:

We have received notification that you paid off the loan. Therefore, we transfer everything back to Wells Fargo. Wells Fargo, in turn, transfers everything back to you.
posted by gjc at 6:44 AM on July 14, 2009

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