Yves also writes:

So you see what happened? The securitization industry decided to impose the convenience of “street name” holdings of securities to mortgages, simply ignoring hundreds of years of precedent and a thicket of local laws (no joke here, the US precedent on the primacy of title documents goes back to at least 1818 in the US. No deed is like “no tickie, no laundry.”) ...

Selling securities in a trust when the trust does not have clear title to assets in the trust is fraud.

So, somebody made the choice to treat mortgages like securities. That's an executive level decision (though I'm betting the fact they already had software for securities was a factor). That's accounting control fraud.

maybe the charge on the Winter Palace will occur in debtor's court.

Yves Smith and Ed Harrison at Naked Capitalism posted on the issue today. The picture seems very positive for owners of houses and very negative for their lenders. In the extreme, it may turn out that the estrangement through securitization of mortgages between title and property and its holder leaves many houses in limbo and indicates that the mortgage business, i.e. the banks, in total chaos.

Judge Drain in New York decided that the resident of the house is therefore owner free and clear of the property. As Harrison alludes to, we doubt the Spanish Inquisition wing of the supreme court will let the holy banks suffer such huge loses despite clear criminal avoidance a fee payment for title transfers.

One commenter, Richard, makes a very astute observation about the title of the house. If titles are casualties of securitization, then how can you sell a house? Similarly, since one of the fees one pays upon ownership closing is "title insurance." Is there an insurance company that will have to pay up when the title just evaporates or is the fee just another scam the real estate bigger scam?

i'd say pass this around to your neighbors, but if mine are any judge, this is already circulating. "Show me the money." it's an ironic if sadly appropriate rallying cry for this age.

and yes, i worked in real estate, and title was god. such is the way it works in our age, and the Law is only for the Little People, who must abide by it to exacting degree. here's what will happen: this trickle will turn into a flood, in the next downturn, and 'activist' judges (mostly looking to get reelected and knowing that their chances are affected by totally different pressures than the Village crowd) will issue a slew of rulings like these. then some blue cross dog will introduce BK style legislation requiring local and area courts to force the Little People to pay up, perhaps to a generalized fund that all mortgage title "holders" can draw from, to compensate for whatever losses they decide they've "suffered."