Faces Of Foreclosure

This is not intended to help you get your house for free. The primary goal is to delay the foreclosure notification and eviction process and to put pressure on the lenders to negotiate with you. Despite all the hype about lenders wanting to help homeowners avoid foreclosure, most borrowers have a different experience.

Too many homeowners face lenders that resist all efforts to work out a payment structure to keep them in their homes. Many homeowners just want these lenders to give them reasonable terms on their mortgages, and help them work through economic hardships.

The following is from LoanSafe.org:

From what I’ve been reading, a COPY of the note is not going to be good enough for the court for the plaintiff to prove that they have the right to foreclose on the borrower. It has to be the ORIGINAL blue ink copy–no electronic copies; it has to be the original and the original only.

This strategy does not require an attorney. All you have to do is fill out the form and file it with the court clerk in your county and they will serve it on the plaintiff’s attorney.

“Produce the Note” is not a technicality that should be treated lightly by the lender or by the Court. When a lender can’t “produce the note,” allowing a foreclosure to proceed puts the homeowner at risk of owing that debt again to another party.

Let’s start with the basics. If a lender wants to foreclose on a property, it has to be able to show that it is, in fact, the appropriate person to whom the money is owed. That right to foreclose belongs ONLY to the person who has legitimate POSSESSION OF THE ORIGINAL NOTE – not a copy, not an electronic entry, but the original note itself with the signature of the person who allegedly owes the money.

So if you are faced with a foreclosure, you have every right to demand that the person trying to take your property, first, prove to the Court that it has possession of the original promissory note.

What often happens, however, is that the lender claims it doesn’t have the original note, because that note has been lost or destroyed. What does the law require the lender to prove?

The “Uniform Commercial Code” is a set of laws governing commercial transactions that many states, such as Florida, have adopted. It contains a specific provision on this subject (Section 3-309) which states that a person can enforce a promissory note without having the original, BUT only under certain limited circumstances. All of the following must be proven:

1. The person has to claim that it no longer has the original note;
2. The person has to prove that it was properly in possession of the note and entitled to enforce it WHEN it lost possession of the note;
3. The person has to prove it didn’t “lose” possession simply because it transferred the note to someone else (i.e., it’s not really lost); and
4. The person has to prove that it cannot produce the original note, because the instrument was destroyed, or its whereabouts cannot be determined, or it was stolen by someone who had no right to it.

All of these matters have to be proven by the person trying to foreclose on the property. It is not the obligation of the borrower to prove or disprove any of this.

It is up to the Court to determine whether the lender has satisfactorily explained why it no longer can produce the original note. The Court also has to be satisfied that when the original note was lost, the person trying to foreclose on the property had possession of the note at the time it was lost. Until the Court has been satisfied of all of this, the foreclosure cannot proceed; if it does, the borrower is still at risk.

Why? Because incredibly, even if a Court has found that the original note is lost and the foreclosure sale is finalized, if someone later turns up with the original note and proves that it is the proper holder of the note, and not the person who foreclosed on the property, the original borrower is STILL LIABLE.

And one more . . .

WHO OWNS THE NOTE? Your goal is to make certain the institution suing you is, in fact, the owner of the note (see steps to follow below). There is only one original note for your mortgage that has your signature on it. This is the document that proves you owe the debt.

During the lending boom, most mortgages were flipped and sold to another lender or servicer or sliced up and sold to investors as securitized packages on Wall Street. In the rush to turn these over as fast as possible to make the most money, many of the new lenders did not get the proper paperwork to show they own the note and mortgage. This is the key to the produce the note strategy. Now, many lenders are moving to foreclose on homeowners, resulting in part from problems they created, and don’t have the proper paperwork to prove they have a right to foreclose.

THE HARM: If you don’t challenge your lender, the court will simply allow the foreclosure to proceed. It’s important to hold lenders accountable for their carelessness. This is the biggest asset in your life. It’s just a piece of paper to them, and one they likely either lost or destroyed.

When you get a copy of the foreclosure suit, many lenders now automatically include a count to re-establish the note. It often reads something like: “ . . . the Mortgage note has either been lost or destroyed and the Plaintiff is unable to state the manner in which this occurred.” In other words, they are admitting they don’t have the note that proves they have a right to foreclose.

If the lender is allowed to proceed without that proof, there is a possibility another institution, which may have bought your note along the way, will also try to collect the same debt from you again.

Tags: produce the note, who owns your home

This entry was posted on Thursday, November 12th, 2009 at 7:38 pm and is filed under proposed solutions, what's going on?. 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.