If you’ve received a foreclosure notice from MERS, or even other so-called lenders who claim to own your mortgage note, we urge you to explore your options. With the millions of home loans out there and the [digital] paper shuffle that ensued when mortgage notes were moved from one financial entity to another, it’s very possible that if you’ve received a foreclosure notice, that the institution sending you the notice doesn’t actually own your original note.

We had a well rounded, and at times heated, discussion about the Morality of walking away from a mortgage, but what if the bank that claims they own your house is flat-out lying to you?

In addition to the issues with the MERS system, we direct concerned readers to The Market Ticker, where Karl Denninger has been engaged in his own investigation. While it’s still ongoing, if Mr. Denninger is correct in his assessment thus far, it’s possible that literally millions of mortgages lack a paper trail to the original owner of the mortgage note. It may be hard to believe that a company can foreclose on a home to which they have no title, but that is happening across the country.

If you’re looking for a smoking gun that proves banks are fully aware of what is happening, look no further than the “addendum” that Wells Fargo is now attaching to foreclosure home sales. According to research at Naked Capitalism, the Wells Fargo addendum during foreclosed home sales is designed to cover the bank in the event that a home they sold through foreclosure proceedings was improperly (and illegally) sold because it lacked a free and clear title, and they have “no recorded title rights to foreclose in the first place“:

Some readers may take this all to be unduly alarmist. But confirmation that this problem is real and potentially serious comes via a new “gotcha” practice by Wells Fargo on foreclosure sales. Wells is sufficiently concerned about the risks of selling properties out of foreclosure that it is springing an addendum on buyers, shortly before closing, which effectively shifts all risk for any title deficiency on to the buyer.

Now why is this a big deal? Go reread the boldfaced sentence above. If a bank like Wells does not have the right to foreclose, it cannot have clean title to the property. So the bank could conceivably be selling something it does not own.

Let’s say you buy a vase from a store. You open the box when you get home and find out the box is empty. You’d clearly be within your rights to get your money back.

With the Wells Fargo addendum, even if the bank has sold you the equivalent of an empty box, you have no recourse to Wells. Zero. Zip. Nada.

Source: Naked Capitalism

Basically, this means that if you purchase a foreclosed property through Wells Fargo, and the original Title holder eventually shows up to re-claim his/her property, then you can technically lose the house, but you will not be able to make a claim against Wells Fargo to get your money back.

There’s really only one word to describe it: SCAM.

So, before you give up and let the bank take your home, consider getting an attorney. There may not actually be a traceable mortgage note holder, which means, if nothing else, you can probably remain in your home for even longer without making your monthly payments. Or, perhaps you may actually win ownership of your home, free and clear.