How a Piece of Paper – Or the Absence Thereof – Can Protect You From Foreclosure

Imagine if you will, walking in to your local Honda dealer and purchasing a car. The following month, you make a late payment, and half a dozen Honda dealers threaten to repossess your vehicle even though only one dealership holds the actual loan paperwork for your car. For up to half of Americans facing foreclosure, a similar crime is taking place - a crime referred to as real estate theft.
Produce the Note: Requesting a copy of your original mortgage note can stall foreclosure action in up to 40% of all cases, according to a University of Iowa study. “Produce the note”, has become the battle cry of millions of homeowners in danger of losing their home, their greatest investment, and their greatest source of security.
A copy of your original mortgage paperwork can be the final thread that protects you from foreclosure or at least a step in the process that keeps you and your family in your home when you have reached the end of your rope and tied a knot to hang on.
With more and more lenders moving to put homeowners out on the street, judges nationwide are holding lawyers seeking litigation against delinquent homeowners to much higher standards regarding the laws governing such litigation. In a landscape where foreclosed homes are destroying the fabric of America, where unfair and predatory lending practices have driven home values to an all-time low, and where the government is too busy bailing out banks to take care of its citizens; the “produce the note” strategy is a huge step in the process of protecting homeowners.
When foreclosure notice is received, requesting the original mortgage paperwork – the actual promissory note which serves as the official legal record of the loan WITH the homeowner’s signature on it, can stall, or even stop the foreclosure process. Over the last decade in the midst of a real estate feeding frenzy mortgages were flipped and sold and packaged up to investors on Wall Street. While lenders rushed to unload the mortgages they made to homeowners, little details like paperwork fell through the cracks. Often times the original note has been destroyed, shipped off to a warehouse, errantly filed, or misplaced entirely. Carelessness on the part of lenders in their rush to profit from mortgage writing may actually protect the very borrowers they seek to profit from.
This oversight on the part of investors can be timely protection for homeowners.
Cases are setting judicial precedent all over the country as judges slow, halt, or throw out entirely foreclosure actions against homeowners where the mortgage holder cannot prove their right to sue for foreclosure in light of the absence of the original promissory note. Once the lender is stalled in court from moving to foreclose they become much more willing to renegotiate the mortgage to assist the homeowner in staying in their home. When the “produce the note” cry is issued, the battle lines are drawn and the gauntlet is thrown down on the mortgage holder.
Another reason that it is important to demand that your mortgage holder “produce the note” is that in some instances, once a lender has foreclosed and put the homeowner out, other lenders who have held the note on the home can also take collections action against the homeowner on the home they no longer live in. If a lender who doesn’t hold the note takes action, then another lender out there somewhere can still take action against you. Again, insisting that they “produce the note” protects you from being charged twice for the home you no longer even own!
According to Mitch Stacy of the Associated Press, “More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes.” The Center for Responsible Lending projects nearly 2.5 million homes will move into foreclosure in 2009.
While “produce the note” is not a guarantee in and of itself to protect you from foreclosure, it can be a step in the process to keep you in your home long enough to find employment, to obtain assistance from President Obama’s new stimulus aid package, or to negotiate a mortgage package that is fair and reasonable with your lender.
For free documents to file your produce the note request with your mortgage holder, refer to Chris Hoyer’s Consumer Warning Network website – http://www.consumerwarningnetwork.com.
The stimulus aid available from the government is only available to people who are still in their homes, so the inability of your lender to “produce the note” may very well enable you to stay in your home long enough for relief to come.