Facing Foreclosure? Read On. . .

by March 16, 2009 • 10 comments

foreclosureRecently, a single mother lost her job in a central Florida town 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. This homeowner, and others like her 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.

In recent 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 has been; some judges are more sympathetic than others. A Tampa lawyer, whose Consumer Warning Network Web site offers the free court documents this woman used to file her request, has played a major role in promoting the produce-the-note strategy.

Conversely, the 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. He said homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.” In his opinion, the original note is almost always electronically retained and can eventually be found.

Although Judges MAY be willing to accept electronic documentation; and, lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan, assembling such documents, to a judge’s satisfaction, takes time, which to homeowners is the point.

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.

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.”

So, what about that central Floridian single mother’s case? Well, she 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, and no court filings.

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1 little lady March 16, 2009 at 10:33 am

This is an interesting strategy, but doesn’t really cure the problem. I wonder if that single-mom is hoping for a new lower interest rate or just a free house?


2 Dennis Fuller March 17, 2009 at 6:53 am

I don’t see how this solves the problem either.


3 GBC March 17, 2009 at 7:16 am

I wonder if that then means she doesn’t have to pay ANYthing since there is no “proof” that she owes money?

Does anyone know the answer to that?


4 CJ Ryan March 17, 2009 at 7:37 am

Little Lady you hit the nail on the head – what is the real goal of this strategy? Unfortunately it seems in many cases it is to actually get a home for free.

Yet another pathetic attempt to bypass any personal responsibility. When did we start teaching that it’s always better to duck, dodge and manipulate the system rather than solve our own problems?

Anybody want to take a guess as to who will actually end up paying for these “no doc” homes?


5 Jeff March 17, 2009 at 8:25 am

CJ, you are so right. The poor single mother who bought more than she could afford now thinks she can beat the system. If you want to stay, you have to pay!


6 Sludge66 March 17, 2009 at 10:18 am

I found it amusing that the lawyers were complaining about, “the homeonwers making them jump through hoops.” Isn’t that exactly what lawyers do to the rest of us…


7 Two Sides March 17, 2009 at 11:06 am

Let’s not be too callous in our reactions. I agree that people and mortgage companies share ‘blame’ in the housing market problems. Did we notice the lady lost her job? While she had her job she evidently was keeping up with her debts. How would we manage if we lost our job? Where is the bail-out money going? It is given to the mortgage companies who get financial relief and can still recoup their losses by having title to the property. And no, I am not a bleeding-heart liberal. The effort may be to gain time to find a job.


8 Miami Beach Homes March 18, 2009 at 8:30 am

That is indeed an interesting method of delaying a foreclosure but like someone else said, the problem remains. Wouldn’t it be wiser to just call the lender(s) and try and renegotiate the terms?


9 judy March 30, 2009 at 11:38 am

Nice post. On foreclosure: I like the produce-the-note strategy. I live in Tampa and know one person he helped, and it actually worked. They did not get the entire home paid for, but they got terms adjusted to be favorable and they were able to avoid foreclosure. It really varries by situation and probably the laws of your state on how far this goes. This site has all the videos they have done. Watch all the videos here:



10 Christina April 27, 2009 at 4:26 am

I am currently in this proceding right now. Last week I sent the paperwork given off the website of consumer watch network and today the attourneys for the bank sent back papers trying to downplay my request to the judge just as it says in all the articles. The next step I am still researching but it seems like this action is working and it has the banks and mortgage companies in a uproar, as they should be they expected us to be ontime with every payment and read down to the letter of the law of the contract note but when it comes to them having to do what the law states they act as if they are above the law. They are not going to do this to me and I strongly encourage anyone else who is in this problem after the market fell and you cant sell your home for 1/10 of what you paid for it to take these steps it is going to make the greedy fat cats to change their ways and in the end mabey most of us will be able to keep our homes that we love. !!!!! anyone please send me comments back on here or suggestions if you are further along in this process then me. Together we all can keep our homes…..