A friend here in SoCal called me today about what she called a "title problem". She is in the middle of a refinance on her multi-unit. The lender gets a title report and says that there is already a mortgage, in first position, on the property. Someone recorded a mortgage/deed of trust against the property in 2005 for $225K. In 2006 she had paid off a an old loan originated in 1998 on that parcel, with no refinance activity since. She assumed all this time that it was free and clear. After we confer about possible premature senior memory issues, any outstanding POAs and her divorce which took place in 2004, I look at the the mortgage docs.

It's really a masterful forgery. The loan doc is perfect. So is the deed recorded at the same time that transfers the property from her and her husband's trust to her name only. The only issue is that she stopped using and signing her married name prior to 2005.

So the lender, Secured Bankers Mortgage Corporation, really existed in SoCal back in the day. As did Equity Title, who purportedly prepared the docs and did the escrow/title. SBMC was a wholesale lender and sold loans to Wall Street investors. It doesn't appear that anybody got any funds for this loan as we doubt that any criminal has been making payments for 8 years in order to keep it current. SBMC has been out of business since the Bubble.

So what's the play here? Were lenders such as SBMC in Van Nuys hiring people to work in back rooms with copy machines and notary stamps ordered off the internet? So they could sell fake paper?

More importantly, how are title companies responding to this? Do they have a list of problem and/or fake lenders and will write over/bond over these issues? Or do all the victims have to get quiet title orders from the courts?