Faces Of Foreclosure

From Nick Adams
EzineArticles
November 2009

One of the defenses against foreclosure that is becoming more widespread is the so-called “produce the note” strategy. Numerous cases have been thrown out once the bank has been unable to provide the note to prove that it owns the loan. Without having possession of the original note and being able to produce it for the homeowners’ inspection, a foreclosure may be declared invalid.

For homeowners to use this defense, however, it is important that you put together all of the information needed and do the required amount of research. Not every court will look kindly upon borrowers raising this defense if there is no legitimate basis for it. Homeowners defending themselves are already viewed as more of an annoyance than anything, so they should do their best to prepare for this type of defense.

The first question homeowners may want to ask is if a copy of the mortgage or note is already attached to the complaint. This can be a good starting point to determine if the bank has access to the original note, although a copy is not definitive proof of owning the note. Banks may attach a copy obtained from a previous owner of the loan but not have actual possession of the original.

Borrowers also may want to research if a copy of the mortgage or note is required in their state. Civil rules of court procedure would be the place to find this information, and can save homeowners a great deal of time if the state does not require the copy to be attached.

Also, homeowners should look in the foreclosure complaint for any affidavits from the lender relating to the original note. For instance, the mortgage company may include an affidavit stating that the copies of the note are true and accurate representations of the original. Another affidavit may state that the bank is in possession of the original note and mortgage. If these are present, the homeowners may wish to request that the original note be produced for their inspection.

Finally, homeowners should look into requesting the original mortgage and note to be included in the lawsuit paperwork for their inspection. This can usually be done through the discovery process, where homeowners are requesting other relevant documents and attempting to get straight answers out of the bank regarding the mortgage and foreclosure process. As other documents are requested (like payment histories), the original note can be requested to be produced.

If the bank fails to produce the original note for the homeowners’ inspection, the case may be dismissed on this basis alone. Of course, borrowers should consult with competent legal counsel, but this new strategy to defend foreclosure is being used with more regularity due to the inability of banks to keep accurate records of the original note.

Steps to get you through this insane process include:

1. Contact your lender and inform them that you are not able to make the mortgage payments. Tell your story and provide the requested documentation. You do not have to continue calling them; they will call you. You have to know when to talk and when not to talk.
2. Start keeping records of every phone call: Date, time, phone number called, who you talked to and notes about who said what to whom. This may well be your strongest defense down the road. (I have 6 pages typed, single lines with my mortgage lender.) Keep everything in a binder in chronological order. This will help save your sanity also and it will be quite effective when a judge notes that the letters from your lender are unsigned do not have anyone’s name (which is the case with Wells Fargo and probably others). It will also be worthy to note that contradictory letters will come from your lending institution within days of each other. The lenders are shockingly sloppy.
3. Tell your friends and relatives. The more people know about your situation, the more chances you will have to get “lucky.”
4. NEVER walk away from your home. The foreclosure process can be a short one or a long one, depending on your actions. You are in control, believe it or not.
5. Stop paying your credit cards. I hate saying this because in my own case, the credit card agencies were wonderful to work with, whereas the mortgage company has been a nightmare. However, your credit card debt is generally unsecured . . . except for your car . . . I lost mine to reposession. But the house is your first priority.
6. Do not pay for help. Call some of the counseling services just to see what they offer. Most counseling services, unfortunately, offer little. The largest groups that seem to get some positive results are NACA (NACA.org) and Acorn. I strongly recommend working with a professional group . . . one that does NOT request payment as nothing can be guaranteed. Also, It is now illegal in the State of California to charge legal fees for services relating to loan modification
7. After the first three months the bank can initiate a legal action. They can send you collection letters. This is the time to request forbearance agreement. Sometimes it is free but usually your lender requests partial payments.
8. Do not rely on Home Affordable Programs out of Washington, D.C.. Sadly, it was not structured to help the homeowners. Trying this avenue is like hitting your head against wall.
9. An “option” is to request a short sale. I hate this “solution” as you do lose your home and while it does not hurt your credit as much as bankruptcy and/or foreclosure, it still hurts. I would go in this direction ONLY if there is no other choice.
10. How long you have until foreclosure is up to you and how much work you put into saving your home: It can be three months or it can be three years.
11. You may be your own best resource. There are ways to delay the process and stay in your home mortgage free while you save enough to move if you must . . . or figure out a way to earn the money to get back on track, which is not easy, but it is possible.

Tags: avoid foreclosure, stay in your home, steps through foreclosure

This entry was posted on Sunday, November 22nd, 2009 at 2:48 pm and is filed under faces of foreclosure, proposed solutions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.