Who Owns The Property If There Is No Note Associated With The Deed?

My dumb-ass speculation on the Foreclosure Crisis, based upon my limited understanding of the legal issues at hand.

From the New American:

Beginning in the 1990s, it became fashionable to sell mortgages to other parties, and the mortgage securitization industry was born. Mortgages were sold, repackaged, and sold again, and a bewildering array of mortgage-backed securities was created to underwrite this new market. The United States mortgage business not only went national but international as investors worldwide rushed to get a piece of the lucrative American real estate sector.

To help streamline the process, Fannie Mae and Freddie Mac created a national mortgage electronic registry called MERS (Mortgage Electronic Registration System, Inc.), whose purpose was to streamline the transfer of mortgages by helping mortgage securitizers to avoid the costs and inconveniences of recording mortgages at local courthouses.

Unfortunately for the mortgage sector, there were two big problems with that approach. In the first place, mortgages and mortgage transfers are governed by state, not federal laws. By providing a means to circumvent the hassles of state laws and local jurisdictions, MERS effectively ran roughshod over state authority. The other, potentially greater, problem, is that the critical document in a mortgage transaction — the one that empowers the creditor to enforce the terms of the mortgage on a delinquent homeowner — is the note, in 45 out of 50 states. A note, like any claim on assets, must be properly signed to have the force of a title. If it is sold to a new owner, it must be signed again, and so forth. Only thusly can what is called the “chain of title” be legally established.

This is a very interesting case. Two issues need to be balanced, one of which could lead to our economic collapse, and the other of which could lead to our collapse into lawlessness.

The first is the moral issue of the individual's responsibility to pay off his debts. If individuals do not pay off debts they owe, our country will collapse economically.

However, the second issue, the legal issue, is even bigger (and when is the legal bigger than the moral?) If our government does not enforce the law when it comes to property, we will no longer have a free nation.

If the banks have chosen not to follow the legal procedures required to establish and maintain ownership of property, then IT IS THEIR FAULT that they would lose control of that property.

An individual would be required to follow through on the legal procedures to maintain his control of his property; he would have to fill out the necessary paperwork, and pay his mortgage and his taxes, or he would surely lose his property. Likewise, the banks must be held to the same standard, or we will collapse into lawlessness.

Thinking this through further, though, it is clear that if the banks don't own the property, NEITHER DO THE INDIVIDUALS, because the ownership agreement has not been followed through by the establishment of the proper paperwork. (It could be said, the individuals have more claim on ownership of the property then do the banks, because they were not the one's who initiated a change in ownership of the note. However, they did authorize such a sale, when they signed the mortgage papers.)

So, here's a question to ponder, and in the question lies a very heavy warning:

If neither the banks nor the individuals own the property, then who does own the property?

Do we follow the thread back to the last owner established by a deed?

Or, is the property ceded to the public good, to then be redistributed,

and, if so, by whom?

Or, is the property simply seized by the government outright, to be redistributed as the government sees fit.

Given the nature of our current administration and Congressional representatives, what do you think the solution would be?