"Produce the Note" Is Working To Ward Off Foreclosure

• June 1st 2011

by Mark Wellborn

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A little over two years ago, UrbanTurf published a post on the “produce the note” strategy, a technique that those facing foreclosure can use to improve their leverage against a lender. It amounts to the home owner demanding that the lender furnish the original paperwork — the actual promissory note — that serves as the official legal record of the loan. If the home owner requests the note and the lender can’t produce it, the foreclosure process could be stalled or, in some cases, stopped altogether. The idea is that the lender can’t prove the home owner actually owes them money.

The Wall Street Journal’s Nick Timiraos recently reported that the strategy is still effective — at least in delaying eviction — as judges are increasingly siding with borrowers when banks cannot produce evidence of ownership:

“This year, cases in California, North Carolina, Alabama, Florida, Maine, New York, New Jersey, Texas, Massachusetts and others have raised questions about whether banks properly demonstrated ownership…in some cases, borrowers are showing courts that banks failed to properly assign ownership of mortgages after they were pooled into mortgage-backed securities. In other cases, borrowers say that lenders backdated or fabricated documents to fix those errors.”

The effectiveness of this technique is due to the fact that many mortgages written during the housing boom were sold, resold, sliced, diced, aggregated, and securitized to the point that the original loan documents might have been lost or even destroyed. And it has been used by borrowers for years. In 2007, a Cleveland judge threw out 14 foreclosures because Deutsche Bank National Trust Co. was unable to produce proof of ownership.

For more information, see The Consumer Warning Network’s Produce The Note “How-To”, which includes templates for legal documents that consumers can use to pursue a produce-the-note strategy. Here is a video from The Consumer Warning Network interviewing lawyer John Yanchunis about the strategy:

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/produce_the_note_is_working_to_ward_off_foreclosure/3582.