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Who Owns Your Mortgage? “Produce the Note” Movement Helps Stall Foreclosures

By
Real Estate Agent with Realty Direct

Who Owns Your Mortgage? “Produce the Note” Movement Helps Stall Foreclosures




Modern-day home mortgages have been so sliced and diced by rapacious financiers that some homeowners are successfully delaying -- or even blocking -- foreclosures through the simple tactic of demanding that banks produce the original mortgage note, which amazingly enough is often not so easy for them to do.

As the foreclosure rate continues to set new highs, a little-noticed legal provision that requires bankers, if challenged, to prove they hold the original mortgage documents before getting possession has spawned a minor homeowner rebellion, alternately called "produce the note" or "show me the note". For homeowners trying desperately to keep their homes, the tactic is one way to buy some time -- and maybe even get the upper hand on the lender.

"You wouldn't imagine that the lenders would be that slovenly that they would not be able to produce adequate documentation of the debt," said House Financial Services Committee member Rep. Brad Miller (D-N.C.). "But apparently a lot of times they really have been unable to."

Since North Carolina has begun to provide legal assistance to homeowners facing foreclosure, Miller said, roughly one of every three mortgages has been found to have some substantial legal discrepancy.

The fouled-up paperwork or other lack of legal compliance "has resulted in a much higher rate of negotiated [mortgage] modifications" in North Carolina, said Miller. "It gave the homeowner additional defenses and counterclaims that strengthened their hands substantially."

The chaos is a sign of how far the mortgage business has come since people commonly took out a mortgage from their neighborhood banker, who kept the relevant documents locked away until the house was sold or paid off. During the securitization boom, millions of mortgages were sold and packaged into bonds -- often many times over, metastasizing into esoteric financial instruments -- for sale to investors. Each time, the paperwork should have been changing hands and the homeowner should have been notified that someone new held the note. But just as deciphering the true holder of the mortgage has become more and more difficult for homeowners -- Is it the servicer? Investor? Trustee? Original lender? -- the paperwork has also become difficult to track.

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Source: Huffington Post

Pat O'Reilly
RE/MAX..214-289-6176 Irving and all of Dallas Fort Worth - Irving, TX

Wow..hard to believe that the banks..lenders..could be so sloppy.

Sep 26, 2009 02:17 AM
Melissa Polce
ERA, Wilkinson Real Estate Charlotte - Huntersville, NC
Lake to Land, I've Got It Covered!

that sounds like a great idea...need to let my short sales know!

Sep 26, 2009 02:20 AM
Sun City Grand Homes Surprise AZ Real Estate Leolinda Bowers Designated Broker Leolinda Realty
Leolinda Realty - Surprise, AZ
Sun City Grand in Surprise Arizona

I would suspect that whenever a lender sold a loan to another lender, it may have resulted in the new lender's inability to produce the note.  Interesting concept.  Perhaps it will get banks to start listening.

Sep 26, 2009 02:31 AM