produce the note!

[keith in RI]

this is something that has been working to help stop, or at least delay, homeowners facing foreclosure. with most mortgages being sold within days after they are signed, either to other banks or investment groups, trying to find the holder of the original note can be impossible at times. your goal is to prove, or make the foreclosing entity prove, that they are the owners of the note, ie debt... heres a link to a website started by a guy to help people through this process. he even provides templates for the filing of paperwork. it involves asking the courts to order the plaintiffs to "produce the note" proving ownership.

http://www.consumerwarningnetwork.com/2008/06/19/produce-the-note-how-to/

here is some info off his site.

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 like this: "...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.

A Tennessee borrower recently had precisely that happen to her. Her lender, Ameriquest, foreclosed on her in July of 2007. About three months later, another bank sent her a default notice for the mortgage on the house she just lost. She called to find out what was going on. After being transferred from place to place and left on hold for lengthy periods of time, no one could explain what happened. They said they would get back to her, but never did. Now, she faces the risk of having her credit continually damaged for a debt she no longer owes.

FIGHT FOR FAIRNESS

This process is not intended to help you get your house for free. The primary goal is to delay the foreclosure and put pressure on the lender to negotiate. Despite all the hype about lenders wanting to help homeowners avoid foreclosure, most borrowers know that's not the reality.

[bigmike]

In a few states this works. In most other states it won't work at all and has to be tried in Federal Court, meaning the homeowner has to sue the foreclosing entity "offensively". There must be a violation of Federal Law for the homeowner to do so; Real Estate Settlement Procedures, Truth In Lending, Fair Debt Collection Practices.

The landmark Federal cases that got the whole "produce the note" strategy going happened years ago in Ohio but the lenders turned around and brought suits in the state district courts and were awarded judgement.

Even when the foreclosing entity can't produce the original note, they'll show up to court with a "lost note affidavit". Unless homeowners know how to attack the affidavit and can explain to the judge why the note was lost is important (intentionally destroyed is more likely), most judges view the unavailability of original signed documents as a technicality, especially if the mortgage or deed of trust was properly recorded in the county register.

The reason the original was destroyed/lost is because the mortgages were fraudulently sold more than once. If the homeowner can convince the judge to compel the foreclosing entity to demonstrate that the true source of funding was not already paid in full through undisclosed third parties (AIG, AMBAC, credit default swaps, cross/over-collateralization) then the foreclosure should be valid.

In most cases everyone was paid without the homeowner's or investor's knowledge and canceling the foreclosure sale and quieting title to the property prevent the foreclosing party from gaining a windfall.

[davidgmills]

Actually this is not the case.  I am an attorney who has filed suit in my state court on my own behalf even though I am current on my payments and even though I am not in a state that requires judicial foreclosure.

Suit can be filed in any state court under the Uniform Commercial Code (all sates use it).  Section 3-309 clearly states what a lender must do if it has lost or destroyed the note to prove up the note's enforceability.  If it can't meet these requirements, it can not prove up the note's enforceability.  If  really contested, a lender may not be able to do so.

Secondly, Section 501 requires the lender every time it demands payment, (whether monthly or in full as in a foreclosure proceeding) to "exhibit the note" if the borrower requests, and it also requires any servicer who does not own the note, to show that it has the authority to demand payment on behalf of the holder entitled to enforce the note.  Moreover, if the lender or servicer can't do these things or can't prove the note's enforceability, the borrower has the right to cease payment WITHOUT DISHONOR under this section.

But it gets worse for the banks.  In March of this year, the Arkansas Supreme Court told MERS it was not a beneficiary of the Deeed of Trust commonly used today in these securitized loans, even though the Deed of Trust in question stated MERS was the beneficiary.  No beneficiary means no trust.  And MERS is the only beneficiary on these Deeds of Trust.  No trust means no lien and no right to foreclose.

I think the outcome of my case very well may be that my Deed of Trust is declared to be void and that I own my house free and clear.  The outcome may also be that a court enters an order that the bank must cease and desist from making demands for payment of my note until it shows it has the right to do so, which may be never.

So there is no need to resort to federal court and you are probably far better off in state court where the judges are usually much more relaxed and have many more hearings.

[cathleeninnh]

Come back and let us know how your suit comes out.

[bigmike]

Yep, MERS is a scam and they've been successfully found to be just that in many states.

The statutes in Michigan allow the foreclosing entity to be the servicer who likely has no interest in the mortgage or note. A pro se litigant tried to make the UCC argument at the state appellate level and the court ruled against her in 2005 stating that they weren't about to let a technicality like a lost note stand in the way.

I've helped people build cases against their lenders as I feel it's the only way the investors that funded the loans ever get the money back. I'd say in 99% of foreclosures of securitized mortgages the nominal lenders or servicers walk away with bailout funds and the house.

I'd love to take a look at your peadings.

[geoff]

So does this mean that even though I am not in foreclosure (and am not near that), I can demand they show me the note when I pay my mortgage, and if they can't I am off the hook for the entire loan?  It doesn't seem like a principled thing to do, since I got in the contract willingly.  Is there some reason this would be principled, such as the note holder selling the note fraudulently?

[bigmike]

I guess you could do it if you weren't in foreclosure. Certain violations of the Truth in Lending Act would allow you to rescind the loan and the lender would have to return all of the principal and interest you had paid, and that occurs without foreclosure.

Usually the produce the note strategy is used to challenge the foreclosing entity's standing to proceed with foreclosure but I guess it could be done. I'm just not sure how one would go about finding an appropriate cause of action to begin legal proceedings.

[violence]

Usually the produce the note strategy is used to challenge the foreclosing entity's standing to proceed with foreclosure but I guess it could be done. I'm just not sure how one would go about finding an appropriate cause of action to begin legal proceedings.

traffic court judges must know!