Paperwork Mess Aiding Strapped Homeowners

Some Homeowners Staving Off Foreclosure By Requesting Original Mortgage Note, Which Is Often Lost Or Destroyed

(AP)  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.

"I'm going to hang on for dear life until they can prove to me it belongs to them," said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. "I'll try everything I can because it's all I have left."

In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it is; some judges are more sympathetic than others.

More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Obama will unveil a plan to spend at least $50 billion to help homeowners fend off foreclosure.

Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.

"We knew early on that the only relief that would ever come to people would be to the people who were in their houses," Hoyer said. "Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could."

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.

Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure - no letters from the lender, no court filings.

The law firm handling the foreclosure for the lender refused to comment.

A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.

The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.

Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost their home. Still, he considers that a success.

"From the perspective of the person who's in the home, you may have kept them in the house another 10 or 12 months," he said. "If I can get a result with economic benefits to a client, then I think I won."

Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.

"Don't leave your home," she said. "Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don't have that mortgage, and you are going to find they can't find the paper up there on Wall Street."

April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.

"This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions," Charney said. "Nothing good is going to happen as long as we continue to bleed homeowners."

[absinternet]

I just wanted to let everybody know, if you don?t already. The government is failing big time. All you have to do is google jekyll island federal reserve. This will give you a better understanding of why the federal government is bailing out the banks and not the consumer. This all stem from Greed. All you have to do is wake up and know that you can fight this in court. Not just the note, or missing documents many other ways to bring the banks down to there knees. At some point they will fail, and as soon as you all realize that is supposed to happen the sooner we can all get out of this mess.

[CraigBerkeley]

Here in Reno, Nevada Judge Brent Adams has a foreclosure according to the Washoe County, Nevada public records. The Mortgage Fraudsters certainly do not deserve a bail-out! Incredible deals in foreclosures for investors? I don't think so. There's blood on the banks hands from their three million illegal foreclosures and counting!!

Is Your Lender A Patriot Or Terrorist?
http://reno.broowaha.com/article.php?id=3462

Beware Of Fraudulent Foreclosure Notices
http://reno.broowaha.com/article.php?id=3825

Many of these Notices of Default are not real, they are fraudulent and they are just another way to steal houses. Then the fraudster ?sells? the stolen house under a fraudulent Trustee?s Deed.

Rachel And Her Children: Homeless Families In America @ http://reno.broowaha.com/article.php?id=3206

The illegal three million foreclosures have also added to the homeless despair.

illegal Is Your Lender A Patriot Or Terrorist?
http://reno.broowaha.com/article.php?id=3462

Just Do The Required Home Loan Modification
http://reno.broowaha.com/article.php?id=4070

Beware Of Fraudulent Foreclosure Notices. Many of these Notices of Default are not real, they are fraudulent and they are just another way to steal houses. Then the fraudster ?sells? the stolen house under a fraudulent Trustee?s Deed. http://reno.broowaha.com/article.php?id=3825

Reno, Nevada?s Countrywide Home Loans manager Sue Barry should also be charged with Mortgage Fraud, along with Prudential Nevada Realty former Regional Manager Valerie Mapes, former Prudential Nevada Realty Realtor Keith W. Gledhill, Mortgage Fraudster Reno landlords John and Kay Sickler, Mortgage Fraudster Reno escrow officer Jenna Kay Clark and her company Reno?s First American Title, Reno Realtor Allan Zane and his Broker Magi Bird, and Reno?s First American Title.
http://reno.broowaha.com/article.php?id=3415
http://reno.broowaha.com/article.php?id=3300
http://reno.broowaha.com/article.php?id=3320
http://reno.broowaha.com/article.php?id=3351
http://reno.broowaha.com/article.php?id=3372
http://reno.broowaha.com/article.php?id=3377
http://reno.broowaha.com/article.php?id=3397
http://reno.broowaha.com/article.php?id=3404
http://reno.broowaha.com/article.php?id=3421
http://reno.broowaha.com/article.php?id=3430
http://reno.broowaha.com/article.php?id=3448

For copies of the supporting documents that have been uploaded, see http://renomortgagefraudexposes.ning.com/

SAVE OUR ECONOMY!!!
http://www.saveoureconomy.com/

[therocket007]

Of course it is mainly middle and upper middle class people in trouble with the mortgage companies-do you think the government even and Obama government would give a dam about poor people getting ripped off-the majority of whom don't even vote they are so disheartened by the system they have given up on voting long ago. The problem is now through some universal taxation those poor people will be paying for these programs in a disproportionately unfair manner, because they will not benefit from the program and because these taxes represent a a greater proportion of their net earnings to begin with. Middle class Middle class Middle class is all you ever hear-how about working class working class working class for a change-oh we saw how differently and prejudically the working class was treated when their contracts were torn up and renegotiated, no concern about contractual obligations there!!!
The heck with the bunch of them-we need a new economy-not this winner ( no matter how you win) take all system. A society should be a cooperative endeavor not one of competiton and those who argue otherwise do so because it is to their advantage to do so. They already have the upper hand or would not advocate such a postion. Others who do have been brainwashed by the system-pure and to simple- to simple to get one's head around.

[ratbiggy]

the majority of the problem loans, foreclosures, etc. were the middle and upper class borrowers.
Posted by susanhelit at 10:01 PM : Feb 17, 2009

Even "middle and upper class borrowers" were being allowed to borrow way more than they were qualified to borrow. For example, because they already had more debt than they could handle...

No matter how much income you have, when you live in the financial fast lane living paycheck to paycheck on a six figure income - what is the bank doing lending you more.

Now these borrowers are feeling the pinch from the economy.

Because they have loans they never should have had in the first place.

[jill-in]

In Indiana immediately following a real estate closing the Warranty Deed, Mortgage Instrument and Note are all recorded at the County Recorder's Office where the real estate is located. Even if the original documents are lost or destroyed, the recorded documents are accepted as legal chain of title and mortgages thereon. When mortgages are released the Release of mortgage and paid off Note are recorded to further reflect change. This information is used by title companies to track chain of title, liens and judgments prior to real estate closings. I believe there should be a Chinese wall between the homeowner-mortgagor and the mortgagees (banks)and investors (other banks)who buy securitized bundled mortgage debt. The bundled securitized debt should be registered and approved by the SEC for investors and the risk is between the debt offeror and the risk taker --- it should have nothing to do with the original homeowner.

[omded]

I completely agree, Independent1. Ultimately, a lot of these things are connected, and, you must take from one fund to give to another. The retirement systems of America have invested heavily in the home mortgage industry, mainly because it was perceived that their investments were backed by the security of the mortgaged properties. As a result, many home buyers are unknowingly funding part of their own mortgages using their retirement savings. When people like this find clever ways to delay making good on their home loans, they unknowingly hurt their prospects for retirement. It''s defenitely an unfortunate situation, however, when people "stiff" their mortgage companies, there''s a good chance they''re also "stiffing" a whole bunch of retirees, or soon-to-be retirees (possibly even themselves). If this becomes a common practice, "hanging on to your home" today may result in your being unable to buy groceries or medications later on in retirement. And a lot of the people who "harp" the loudest about losing their homes today will be "harping" even louder in their hungry retirement (or when they''re working into their 80''s because their pension funds have declared bankruptcy).

[omded]

Another point regarding the consultation of an attorney prior to signing a purchase contract. Yes, many states do have laws that forbid certain contractual provisions, and, as a result, render them null and void. However, those laws cannot and do not protect you from everything. There are lots of perfectly legal provisions that may be unadvisable for you that the law will uphold. TAKE THE TIME AND MAKE THE INVESTMENT TO FULLY UNDERSTAND WHAT YOU''RE AGREEING TO BEFORE YOU AGREE TO IT!!! Consulting an attorny is not "stupid". It''s prudent. In fact, I feel it is extremely unwise not to.

[omded]

I disagree with SusanHelit''s position regarding having a lawer review your documents prior to signing them. I stongly advise all prospective home buyers to have their purchase agreements reviewed by an attorney who specializes in real estate issues. If the property you''re planning to purchace is part of a "Home Owners Association", I advise having the attorney review the CCR''s as well. Specifically, ask him or her to look for anything they view as a "red flag", or potential problem issue. For $300, you can have a good, experienced attorney review your documents, and advise you of things you may not be aware of. He/She may discover something that will completely change your interest in the property. When considering the amount of money you''re about to commit yourself for, the cost of an attorney is a small fee, and it can pay off enormously if it results in your being alerted to a provision you weren''t aware of or didn''t understand. It doesn''t matter if the terms are non-negotiable (and, trust me, while the forms may be standard, and fill-in-the-blank, the blanks can be filled in very differently from one contract to another!). Remember, you always have the right to refuse the contract, and, if it''s a bad one, you definitely want to refuse it. After you sign it, it''s yours, so make sure you know exactly what you''re getting into!

[susanhelit]

Lenders were asked, in front of Congress, was the problem the loans to poor people. They said no, in fact, the majority of the problem loans, foreclosures, etc. were the middle and upper class borrowers. Sorry guys, stereotypes are fun - but the problem was with the people with money spending like they had even more money. And, of course, let''s not forget those who have lost jobs, etc.

[oldpoet-2009]

The only thing recorded at the County Recorders office is the deed, NOT the mortgage.

The mortgage is a contract and is supposed to be in the hands of the lender. If the lender sells the contract, then the contract holder SHOULD have a legal copy of the contract. The point here is that after being sold so many times, the latest contract holder often does NOT have a legal copy of the contract.

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If I go to court or any other legal proceeding with out proving documents I will lose my case. Why should the banks be any different.


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Posted by will_1022 at 05:29 PM : Feb 17, 2009

They shouldn''''t. But when you sign a mortgage it is usually recorded at the County Recorders Office. Are you now saying that this recordation is not adequate proof of a liability? If yes, then I want to contact the credit reporting companies - Experian, Equifax and TransUnion - and dispute that I owe anything on my home. Yeah, I am sure that will work the same way right?


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Posted by IndependentI at 06:00 PM : Feb 17, 2009

[susanhelit]

Hysterical - someone is actually dumb enough here, and lacks all Credibility, as to actually think that the point of requesting the original note is getting the note? It''s a delaying technique, as anyone not completely stupid would see from the article. The point isn''t to get the paperwork, it''s to DELAY foreclosure.

The homeowner has their copy - but if the bank cannot find their own copy, they cannot foreclose. This gives the homeowner valuable time to try to get money, renegotiate the loan, get a new job, etc.

Oh, and in most states, it is not recommended nor necessary, nor smart, to have a lawyer when you buy a home. Contracts are standard and not negotiable, and subject to legal standards and protections for all sides. So having a lawyer is just plain a stupid waste of time - they can''t change the contract, no new information will be present, it''s a good way to waste money, and that''s it. There are a few states without the standards where you need a lawyer - but not most of them.

[credibility2]

Well, now, this shows you how really stupid many of the now distressed homeowners are. More than likely they never even sought legal counsel on their real estate deal. Had they, automatically the homeowner is given a copy of all related paperwork, especially those that the homeowner signed. Are people really this stupid and ignorant as to not even demand a copy of something as critical and complex as the mortgage papers they signed? And yet, these idiots blame everything on the lenders. Come on kids, these idiots should have taken an IQ test as part of the qualification process to get their loans. Again, if people are this stupid, they haven''t any business being allowed to get involved in a contract like a home mortgage.

[spadeisspade]

I agree with you, Independent. These sub prime mortgage loans were too good to be true; my mom always taught me that if something was too good to be true, it probably was. Imagining that you could buy a home with little to no money down, and that somehow you were magically going to be able to afford the payment going up in a couple of years with an ARM loan (not to mention some not even reading the fine print with an hour of a lawyer''s time) is very irresponsible. We all want that American dream to own a home, but unfortunately a lot of us woke up from it in a cold sweat.

[veerod1]

"Rich people knew how to handle debt and know how to handle debt. Poorer people I am sorry to say did not know how to handle debt and do not still know how to handle debt."
Posted by IndependentI at 07:47 PM : Feb 17, 2009

I agree with you totally. That is why lender''s should not have been allowed to issue sub-prime loans and other predatory instruments to people, who on close scrutiny, could not afford or understand them.
25 years ago, when lenders had stricter standards, most of these borrowers would have been laughed out of the bank.

I have had several dealings with mortgage brokers and I know that car dealerships and mortgage companies are very differant. However, it seems that, ethically, they are about equal these days.

When I got my first mortgage 30 years ago, at 19 years old, I trusted my broker and relied on his advice. It paid off. I have seen the industry deteriorate over the convening decades and would not advise anyone to trust them. Get a lawyer to look over all paperwork----even if they are right up there (or should I say ''down there'') with car dealers.

[tmittelstaed]

"..."I''m going to hang on for dear life until they can prove to me it belongs to them," said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. "I''ll try everything I can because it''s all I have left."..."

Someone who is very unclear on the concept. Sure she may not be evicted - but as long as the bank holds the mortgage she can''t sell the home, so she won''t get any access to the equity in it.

Her credit record is also trashed and 7 years from now won''t be cleared - because the bank will still be reporting her as delinquent.

About the only time a trick like this would be useful is if your a family that has kids and you just need a few more years to get them through school and out of the house.

But as soon as the housing market comes back and there''s demand and home prices go up - the bank will do what is necessary to complete the foreclosure.

[veerod1]

"I did not know that home buyers had guns held to their heads to buy a home and get that...mortgage..You signed papers that said you would pay back the loan. How can this be mis-interpreted?...you honestly believe you should be entitled to live there for free?" (Comment by IndependentI)

I am not saying that they should be able to live for ''free'', but I believe they should be able to renegotiate loans when predatory lenders told them they could afford them.

I once went to a lender at a car dealership with my 17 year old son to negotiate a loan for his first car.

They didn''t hold a gun to our heads but they tried every trick in the book to get me to sign a loan w/o telling me the terms of the loan--only the monthly payment.

They just about held us prisoner by stalling for several 15 min. increments while he "checked with his boss". After an hour and half we literally had to sneak out--and then the guy ran after us chasing our car and banging on the window!

I had had experience with lenders and loans before. I am sure many of these borrowers were inexperienced and relied on their broker''s advice.

[omded]

"It''s not your fault". "You''re the victim here". It was a "Predatory Lender". Your lender is "Unscrupulous".

All of these commonly used terms and phrases may make troubled borrowers feel good, but they don''t change the fact that they signed the papers. They don''t change the fact that those papers had the entire lending agreement stated on them right above their signatures. It is the borrowers'' responsibility to fully understand what he/she is agreeing to, and to seek counsel if needed. The only way you can truly be a "victim" is if your lender points a gun at your head and says "sign this". Thankfully, that''s not a very common occurance.

I suppose this stalling tactic makes smart sense, but I don''t think it''s a good idea to rationalize your way out of the responsibility for your mistakes. If you borrowed money for a home and you can''t pay up, you''re probably best off recognizing your mistake, owning up to it, moving on, and learning from it -- or, in other words, not making the same mistake in the future.

[will_1022]

If I go to court or any other legal proceeding with out proving documents I will lose my case. Why should the banks be any different.

[veerod1]

"What goes around comes around and you may not like to be treated the same as you treated others." (Comment by IndependentI)

Yes, you are right, what goes around comes around, even for unscrupulous lenders!

[musethalia]

So who gets sued if a burglar breaks in and gets injured while you are living in this home? Do you get sued or the mortgage holder? What if the home burns down while you are living for free in there. Can you sue the mortgage holder for the value of your contents plus pain and suffering? Depending on the answers to these questions, some Americans could make a life of living for free and then getting paid big time for the emotional distress caused by losing all of their property or maybe a pet to a house fire. Interesting scenario''''s huh?

Posted by IndependentI

ummm...when you have a mortgage, you are required to hold homeowners insurance - the mortgage company will never be sued for anything - you hold insurance to cover these items - if you''ve ''fallen'' thru the cracks and do not hold homeowners insurance, the mortgage adds to your bill, the cost to insure your home, which is much higher than obtaining it on your own (like your auto) so if any of the said scenarios ever come in to play, either your insurance company is liable for what you pay to avoid yourself, or if you quit paying before your mortgage company finds out you have no insurance, you pay out of pocket...there is no ''living for free then getting paid big time'' as you assert - you are responsible for your own actions. (and btw...''pain and suffering in the examples you''ve claimed herre is a quick money scheme divised by lawyers)