Attorney Says Producing Mandatory Paperwork In Foreclosure Actions "A Gigantic Waste Of Time"

Bloomberg News ran a story last month on the difficulties foreclosing mortgage companies are facing by their inability to produce the mandatory paperwork in court when initiating a foreclosure action. The following excerpt caught my eye:

• Requiring banks to produce the paperwork at a foreclosure hearing is a nuisance, said Jeffrey Naimon, a partner in the Washington office of Buckley Kolar LLP. "It's a gigantic waste of time,'' Naimon said. "The mortgage may have transferred five, six, eight times. It's possible that you don't have all the pieces of paper, but it was enough to convince the next guy in the chain. There's no true controversy over whether the owner owns the loan.''

What needs to be pointed out to anyone harboring this belief is that when the debtor/homeowner pays the loan off in full, he/she is entitled to physically receive his promissory note back, and is to be marked "cancelled" by the creditor. Simply receiving a satisfaction of mortgage, while enough to clear the lien from the title to the home, is not enough to actually cancel the debt evidenced by the note. By not having the promissory note returned, the debtor/homeowner is legally left in a position where he/she may have to pay off the note a second time if the note (known in the law as a "negotiable instrument") turns up in someone else's hands and is presented to the debtor/homeowner for payment.

I trust that in attorney Naimon's case, above, he was either misquoted or had his words taken out of context. I say this only because any attorney handling foreclosures for lenders who actually asserts the position expressed in the above excerpt and believes the lender can obtain payment on a promissory note without any corresponding obligation to physically possess the note and be in a position to surrender it to the debtor/homeowner upon full payment is either clueless, willfully ignorant, or being intentionally deceptive as to what the requirements of law are in a mortgage foreclosure action.

For the article, see Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

For a related post, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha