I can’t guarantee the success of this technique in every jurisdiction (unless you send me a big check), but it has worked to stall foreclosures or get foreclosure cases thrown out of court. Yep.
Here’s the secret weapon: Demand the bank produce the original Mortgage Note, which contains the terms of the loan. If they can’t produce it, their case is in jeopardy.
From an Associated Press article by Mitch Stacy:
ZEPHYRHILLS, Fla. (AP) – Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.
And just like that, the foreclosure proceedings came to a standstill…
Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure – no letters from the lender, no court filings.
During the boom, home mortgages were sold and resold, grouped and sold to investors. With all the shuffling of paperwork, many original notes signed by homeowners were lost or destroyed. In layman’s terms, that’s called a “loophole”.
Asking for the mortgage note can, at the very least, delay foreclosure, buying the homeowner some breathing room and a chance to renegotiate.
There are no statistics on the effectiveness of the “Produce the Note” strategy but I can say, as an attorney, that a persuasive lawyer and a sympathetic client can work legal wonders.
According to Stacy’s article:
A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.
The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.
So, when the bank asks you to show them the money, ask them to show you the note.
Further Reading:
The Loan Ranger: Lawyer Outwits Banks in Foreclosure Battles (New York Post 2/22/09. via Linda Davis)
Technorati Tags: foreclosure, mortgage note, stop foreclosure
