On October 22, 2001, Benjamin Ritchie executed a promissory note and mortgage in consideration for a $47,000 loan from WaMu. The mortgage covered both real estate located at 1790 Mount Mariah Road, Carlisle, Kentucky, and a manufactured home to be situated on the real property. The mortgage was properly filed in the Nicholas CountyClerk’s Office onOctober 31, 2001.
Ritchie used the proceeds of the loan to purchase a manufactured home, which was subsequently rendered a total loss as a result of heavy fire damage. As the named loss payee on the insurance policy for the home, WaMu received and released the insurance proceeds to the Debtor to purchase a replacement manufactured home. WaMu failed, however, to record its lien on the certificate of title to the replacement manufactured home.
On January 20, 2006, WaMu initiated a foreclosure action on the property. Ritchie raised the defense that WaMu no longer had a valid lien on the manufactured home. Is Ritchie correct? Explain your answer. [In re Ritchie, 416 B.R. 638 (6th Cir.)]