'Produce-the-note' foils forclosure

By Mitch Stacy
Associated Press Writer


ZEPHYRHILLS, FLA. 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 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 their 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 dollar home in Zephyrhills, near Tampa. "I'll try anything I can because it's all I got 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 has been; 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 website offers the free 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".


Sorry if this was already posted or strategy is used here, or is useless I do not have a mortgage or a HELOC. So I really don't post in this forum. However I was at work today and saw the article and if it can help any CB'er out. It was well worth the post.

I don't understand why it buys time to ask the bank to prove ownership. Usually the bank is not the owner but the servicer and the investor owns it, so are you saying to ask the bank to as the investor to prove ownership?

Also, how does it buy time to prove ownership? Surely a bank would not bother to foreclose on a loan that was owned or serviced by another entity.

There are numerous threads here about the situation.

In Florida banks are foreclosing everyday on loans they don't really own. One lady was foreclosed on by two banks at the same time for the exact same loan.

So if I were to contact my mortgage company what words would I use? Would I say, "Send me a copy of the original note?"

it is well worth the post. maybe then these banks will get their paperwork in order

http://www.hud.gov/offices/hsg/sfh/res/reslettr.cfm

Craft it to fit your needs and situation.

Ah, the QWR letter. So I could write a letter of complaint telling them what's happened and then simply ask them to send me a copy of the original note. Come to think of it, though, just because they send me a copy doesn't mean they have the "original"/

I don't think it has to be the Original note. But if its a copy verfiying that you agreed to paid said amount every month, with your signature.

See the catch 22 is alot of mortgages were sold as securities now buyers are defaulting due to the economies crisis. The bank is trying to foreclose and can't prove that you in fact have a stated mortgage with them. ITs like me saying I loaned you 1k and we had a agreement that you would pay me in payments with interest. But now I sold that agreement as a security, to fund someone else. your still paying me for the obligation but its filling someone elses pockets. in the meantime this paperwork is in my way. I technically don't have any obligation just a middle man now. So I get rid of it. Now you stop paying ok I'll get what I techincally own back. But now I have to prove that you infact agreed to these terms. So when I go looking for the note saying so?? UHHH MMM where did it go? I guess it puts me into a rock and hard place. So I could either try and find something to prove this or make a consideration to regnegotiate to make your payments more "affordable"

My problem is From what I understand if banks foreclose, or repossess colleteral, I thought they lose money? Wouldn't it easily be in their best financial interest to renegotiate terms and still make money, rather than sell the property make some immediate cash but no future payments and interest to come from that?

You'd think.
Problem is some mortgages have been so thoroughly chopped up when they were sold to investors, the banks don't have authority to modify a note that they service but do not own. They may face lawsuits from investors if they modify a mortgage they don't really have ownership of.

I wonder if I should go ahead and do this letter. Time is getting short - auction is mid-March! I have a loan mod app in to Chase through NACA but Chase says they don't have it. I contacted the executive resolution team at their executive offices and I am being pressed to send in documents myself, namely tax returns, etc. so I can do a loan mod directly with them. From what I have read on other forums, the fact that Chase can't find the documents from NACA is nothing new at all. It appears they would rather ignore NACA so they can offer me some sort of lousy mod. The problem is time is getting short - auction is three weeks away, something the man in the executive resolution team keeps reminding me about.

Ew. Never thought of that.

As for Copies of Original Notes. Here in Ohio, they are filed with the county. NOT hard to get. And usually they must be attached to the complaint for foreclosure?

If saving your house means that much, then you can always file BK at the last minute.....

Well if I was invested into a security, and it was gonna be a total loss due to foreclosure, Id rather have the bank work a deal, rather than just leaving it dead in the water, However Wall st. is money hungry so They will find a way to make a quick buck at someones expense.

Ok, here's a website with more information on Produce the Note, also there are sample letters for you to submit and whom and where to submitt them. The website is www.consumerwarningnetwork.com and then on the left hand side of the screen is Archieve, click on the one dated June 2008. If you have any question or need sample letters you can email me at email removed for privacy.

I don't see it like that.

For one thing, that is assuming a modified loan would actuallly be paid on time after modification. Default rates are very high on modifications, a lender/investor could be modifying a loan in foreclosure, have it reset it to current only to have start the foreclosure process again when the homeowner defaults on the modification. Now they have to start the entire foreclosure/collection process over again, all the while collection nothing from the homeowner while racking up servicing/collection/escrow fees they might be paying on behalf of the delinquent homeowner.


Often, a lender/investor is modifying a loan on a risky debtor that has a very recent history of not paying their debts, receiving future payments with the homeowner could be a coin-toss. Or, they could sell at an auction and receive their cash within 24 to 48 hours. They could then lend more money against this cash to borrowers that are not as risky to collect payments from.

Lenders and investors have a choice to make with a truly genuine distressed homeowner..........Is this distressed borrower in a situation I could work with AND has a good chance of not defaulting again, OR, for whatever reason - they don't believe this borrower is serious about keeping their home and/or inability to pay will always be an issue and/or they are not willing to accept the ROI to make a payment affordable for a distressed borrower (i.e. they have to go to 1% interest for an affordable/realistic payment).

+1 cinderella I do see your point there, But there are people who have great scores and payment historys on their mortgages that are falling behind. and they just dump in on them.

I can see if your in a real risky deal, where the borrower has been in trouble before and it looks like its a total failure. I just assume when I posted before that many variables apply. You just lost your job, and now you gotta a little bit of a pinch going till your next secure income rolls in. but Youve been a low credit risk and excellent payment history times many years.. Is it better to just destroy them, or let them work a deal that can get them settled for ttime being??

The copy is really unimportant, unless they can't produce it. If they can not produce a copy, then the chances of them producing the original is slim. The original is what is important. They need to show up in court, with the original. Not a copy of the original.

I see your point unleashed, but I don't think lenders are out to destroy homeowners at all, or at least not anymore than some homeowners are out to destroy them. To me, modifcation are like the Wild Wild West.......a bunch of yahoo's on both sides of the fence.

Walking away from one's home when inability to pay is not an issue, demanding the bank reduce interest and principal "or else!".......and so on, i think the behaviour of destruction is reciprocal between some homeowners and banks.

If the argument is Is it better to just destroy them, that same idea to applies to banks and how some homeowners deal with them. By no means am I saying banks are saints, but the knife cuts both ways. There is alot of bad behaviour going around on various sides.

The reality, banks have laid of thousands and thousands of workers. They are being reamed by homeowners, ones who are deliberately paying late to have their lender agree to eat money to ones that truly have a serious inability to pay (the homeowners modifications are intended to help) to ones that maxed out their houses with a cash-out refi and choose to walk to ones that demand they receive the interest rate Joe Blow down the street received when he lost his, despite not having an inability to pay.

Look at their recent losses, these guys are struggling too, but nobody cares, and wanders why their bank has the audacity to expect payment from them, when inability isn't the issue.

Hobbled by a stunning $16.5 billion loss in the United States, HSBC, Europe's largest bank, said Monday it would close most of its consumer lending business in the United States and lay off 6,100 people.http://www.suburbanchicagonews.com/newssun/news/1456811,5_1_WA03_HSBC_S1.article


Citigroup may need to raise additional capital despite the U.S. government’s move to bolster its capital base, said an analyst at Deutsche Bank, who sees a 2009 loss of about $4.5 billion for the company excluding any preferred-share dividend payments.
http://dealbook.blogs.nytimes.com/2009/03/...l-analyst-says/


The credit card figures are dwarfed by those relating to Citi's institutional clients group, which had a net loss of $20 billion. The big reason for that was write-offs amounting, pretax, to a colossal $32 billion. By far the largest chunk of that total was $14 billion related to subprime-mortgage exposures. But the company also took write-offs for Alt-A mortgages, monoline insurers, highly leveraged loans, auction rate securities, commercial real estate, and structured investment vehicles (SIVs). Wherever there's been trouble, there's been Citi.
http://money.cnn.com/2009/03/03/news/compa...on=money_latest

TD Banknorth Inc., the seventh-largest bank operating in the Albany, N.Y., area, ended 2008 sitting on $2 billion in unrealized losses in an investment portfolio that includes risky mortgage-backed securities.
http://www.bizjournals.com/albany/stories/...ml?ana=from_rss

Yawn

Exactly what does your post mean?

And she never thought paying your mortgage bill each month would solve the problem? So she can live for free, gee what a great world...

pay it to who? obviously the entity that foreclosed couldnt come up with the note so they arent entitled to it.

The physical note is not the issue. 99.9% of all real estate contracts are scanned and are on a hard drive somewhere. What is happening is that original notes were being bought and sold at a tremendous rate and lumped together with other notes sold on the open market, chopped up further and spit out on wall street. This paper trail is a b*tch!

The physical (original) note is the issue in Florida. A copy is not usually acceptable to the courts, because it could have been altered.

in Florida and obviously Ohio its REQUIRED as Deutsche Bank found out to their detriment.

Sometimes I think people don't read the entire post, before jumping in with dubious info.