Quiet Title for Homeowners with a Mortgage

I’m sure I’m not the first to have thought of this, but with the banks not being able to prove they hold the note on a house, why can’t a homeowner bring an action for quiet title?


Then, the bank would have to prove their ownership, and if they don’t, the house is yours free and clear, no?

(Not looking for legal advice. Just asking a question that surely some smart lawyer has thought of before. Just wondering why it wouldn’t work.)

A mortgage holder does not own your house. I’m sure a lawyer can give the legal definition of “ownership” but look at it simplistically, can they sell your house? If not then they do not own it. What the do own is a secured lien and thus they can prevent you from selling if you do not pay off the note as part of the sale (hence the negotiation during short-sales).

Quiet title comes up a lot in tax lien sales, but that is to resolve any possible problems with the tax deed such as lack of notification. IANAREL but I suspect most quiet titles are unnecessary and simply meet statutory requirements for a merchantable deed.

If the bank can’t prove they hold a note on a property, then they don’t hold a note on the property and there is no mortgage. That’s not the same as an ownership dispute.

Normally, banks record mortgages at the local courthouse, attached to the property records. But even if they forgot to do this initially, they have paper with the mortgagee’s signature that is proof, and they could file it late. Or not at all. AFAIK, it’s not necessary to file a mortgage with the government to make it effective, just a darn good idea to avoid disputes later.

IANAL, just a real estate agent, so if this is important to you, please confer with a lawyer.

Nitpick: a mortgage is not a loan; it’s a specialized form of property lien given in consideration of the loan accompanying it. Let’s say I have my heart set on buying Blackacre for $500K, but I only have $100K to put down on it, which is obviously not enough compensation to induce its present owner, even though he has it on the market, to sell it to me. Rapacious Bank and Trus Co., however, is quite willing to loan me $400K provided I pay them $750K in principal and interest over a 30-year span. But they want some assurance that their $400K is going toward the purchase of Blackacre, not to be frittered away on hookers and blow, and that they can take possession of Blackacre if I default on my payments for an extended period of time. So they oblige me to give them something that effectively makes Blackacre collateral for their loan. That something is a mortgage deed; I am the mortgagor and RB&T the mortgagee. Many people use “mortgage” and “home purchase loan” as synonymous; they are not. The mortgage is the collateralization of the loan, and it passes in the opposite direction to the loan.

As for the OP, Bank of America or Capital One is at law no different than someone’s next-door neighbor or estranged cousin claiming to have an interest in a given piece of property – they are obliged to prove their case by evidence, in this case relevant papers demonstrating a clearcut sequence of transfers of the relevant property interest, or they are effectively SOL.

As noted above, they need not have ever filed the mortgage deed or its assignment which gives them such an interest, but they must at least be able to produce it to make good their claim to such an interest.

In states that don’t require foreclosure to go through a court, banks can always foreclose simply by swearing that they have a mortgage but con’t find the documentation. People without any outstanding mortgage loan have had their properties stolem by a bank in this way. Sure they can get them back, but the onus is on them to sue, prove by a prepronderance of evidence against a major corporation with high-priced legal talent that they are the rightful owners. It can be done, but it is an awfully steep hill to climb.

The homeowner can’t show that no one holds a note against his or her house.

Thanks for all of the replies thus far, but to answer this one, doesn’t a quiet title action say something to the effect of “Let ANYONE who has a claim in this matter come forth”? In other words, put a legal advert in the newspaper, or serve interested parties in some other way, and if they don’t come forward then they are screwed?

Or maybe I misunderstand. To respond to earlier posts, yes, the bank does not OWN the house, but they have an interest in it. Perhaps I state in my action that I wish to sell the property and see that the bank has an “alleged” mortgage against it on file and they keep sending me statements every month. I contend that they don’t own the note and want to quash their claims to my property. Valid?

Again, not legal advice, I’m not selling my house…Thanks.