If you’re facing foreclosure and have run out of options, requiring your bank to produce the note may buy you some extra time. Only one institution can possess the original, signed paperwork, and they will have to produce it to prove, in a nutshell, that you owe them money. It’s a simple enough request on the surface, but with banks and lending institutions regularly selling mortgages from one to another, your original paperwork can easily be lost for months or years, or even destroyed. You have the right to ask a judge to forestall foreclosure until the original note can be produced. This may give you additional time to re-negotiate a deal with the lending institution, find a new place to live or sort out your finances and recover.
In 2007, professor of law Katherine Porter conducted a study of homeowners who had filed bankruptcy to save their homes, and found that the note can’t be found 40% of the time. That means that 60% of the time, the note can be found, and in some cases immediately produced. But even if the lender can produce the note on the spot, you haven’t lost any ground. You might benefit and there’s nothing to lose, so it’s worth the gamble.
A request to produce the note is merely a stall tactic to win time and an incentive to pressure the lender to cooperate. Don’t expect it to save your home from foreclosure in the long run. There are only a few ways to do that, by striking a financial bargain, recovering enough economically to bring your mortgage up to date, or by declaring bankruptcy to force a deal with the mortgage company.
The best news is that you don’t need a lawyer to file the papers and ask for a stay. The Consumer Warning Network offers a form to download if your lender has already filed suit. Fill out the first form and send it to your lender by certified mail. Call the Clerk of the Court in your area to find out if you also need to send copies to the court and to the attorneys for the lender.
If the lender has not yet filed suit, use the second form, which is a customizable letter to your letter asking the lender to produce the note. If you don’t get a response and the lender files a foreclosure lawsuit, use the first form and then follow up with the step below.
Your lender has thirty days to respond, and then you can file a motion to compel, asking a judge to make them produce the note. The judge does not have to decide in your favor, but he might. He can also choose to accept an affidavit from the company that admits the paperwork is lost.
The Hidden Danger
This may seem like a frivolous waste of time on the surface, but there is an inherent danger lurking below. Remember that banks trade paperwork and possession of your mortgage regularly, sometimes many times over the life of a loan. If the court decides to allow the foreclosure and you lose the house, and then later the original paperwork turns up in the hands of another lender, that lender can sue you for foreclosure on the house you already lost. Forcing the lender to produce the note serves not only to potentially stall for time and keep you in your home, but also to protect your future credit against a true injustice.