The Publicity Continues For The "Produce The Note" Strategy In Fighting Foreclosure

The Associated Press yesterday ran a story on the so-called "Produce The Note" strategy used in defending homeowners facing foreclosures against careless lenders and sloppy, "foreclosure mill, assembly-line" law firms who have contributed to a nationwide mess.

• 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 and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess. During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.

• Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.(1)

***

• Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are "making lawyers jump through procedural hoops to delay what's likely to be inevitable."

• Deutsch said the original note is almost always electronically retained and can eventually be found. Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. Still, assembling such documents to a judge's satisfaction takes time, which to homeowners is the point.

For more, see Homeowners' rallying cry: Produce the note (if link expires, try here).

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) It should be noted that, technically, it is impossible to renegotiate the loan terms with the foreclosing mortgage company until they have first proven, through the production of the appropriate paperwork, that they have the legal authority to do so. Negotiating the repayment terms with a mortgage company that subsequently is found to have acted with no authority to do so leaves a homeowner with an agreement that is null and void. An illustration of the current confusion existing with mortgage holders and servicers is contained in an account describing an incident where two different mortgage companies filed for foreclosure involving the same mortgage loan. See The Wall Street Journal Law Blog: Foreclosure Mess: Two Different Plaintiffs Claim to Own Same Mortgage.

At least one foreclosure defense attorney has reportedly pointed out that, because of the way mortgages have been securitized, it’s often unclear who actually owns the debt, and further, in many cases, the originating lenders only pledged these loans and didn’t actually transfer ownership of them to the trusts that are supposed to hold them and issue the securities. See 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers). KappaMtgDocsMissing