This trend has now reached California, so it's about to become a whole lot more meaningful.

Again, this may be a matter of paperwork, but at minimum, it seems like banks will have to spend time and money straightening out their claims to homes on loans they've securitized.

The problem has to do with the electronic record keeping system involved, known as the Mortage Electronic Recordkeeping System (MERS). But it's not just a technicality. How can anyone claim a right to a property if they can't find the title to it?

The thing is, I'm not sure these decisions are appealable, since they're adjudicated in bankruptcy court. So the banks may have little legal recourse. Yes, they may get Congress to step in somehow, but I doubt that will happen overnight, not with the mid-term elections coming up.

Money quote from the judge in Cali: "Since no evidence of MERS' ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law."