There’s been a lot of reports in the news and on foreclosure websites about the Produce the Note campaign. There’ve been a few landmark cases where homeowners have been able to get their homes awarded to them by the court (and the mortgage nullified) because their lender couldn’t produce the actual deed of trust promissory note that proved they owned the mortgage.
photo by woodleywonderworks
This is because most mortgages nowadays name Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary of the deed of trust or promissory note rather than the lender you actually go the loan from.
The reason they list MERS rather than a lender is so the lender can sell your loan to another lender or pool it together with other loans without having to get you to sign a new deed of trust.
According to the OptionARM Lawyer Blog, there was a recent California court ruling on a case where the homeowner’s sole defense was that the lender couldn’t produce the note. Here’s a synopsis of what happened. If you’d like to read the whole article and his opinion on what it means, go here.
The court ruled that there is no requirement anyone produce the original promissory note as a pre-requisite to pursuing a private trustee sale.
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It is well-established that non-judicial foreclosures can be commenced without producing the original promissory note.
So what’s this mean for you, as a homeowner trying to stop foreclosure? Especially if you’re not in California? Here’s Steve Vondran’s (the OptionARM Lawyer) opinion:
The court cited a few other cases that resulted in the same outcome for plaintiffs asserting the “produce the note” foreclosure defense strategy (obviously in an attempt to tell future litigants in California “give up trying to verify anyone’s credentials”).
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Do not rely on “produce the note” as a silver bullet foreclosure defense that is going to stop your foreclosure with an injunction and get your house for free. If there are glaring irregularities and other legal grounds to get you into court validly, then you may want to tag on this claim and see if you can get a different outcome from a different judge. But suffice it to say as a stand-alone legal theory, there is simply not much teeth to it.
Most of the cases where you hear of some success come from Florida and Ohio and other “judicial foreclosure” states where the lender is forced to file in court to start the foreclosure process. In these cases, the issue becomes a question of “standing” and “real party in interest.” There is also the bankruptcy angle that we will be exploring in greater detail in future posts.
So what do you think? Is the “Produce the Note” campaign dead…or dying?
Have you tried it to save your home? If so, what happened?
Tags: judicial foreclosure, Laws, litigation, mortgage deed, non-judicial foreclosure
March 9th, 2010 at 11:03 pm
If it doesn’t work-it should. Bottom line is, these lenders took your mortgage and turned it into a financial swapping and trading tool. They took risk and cut corners hoping to get rich quick off all the peoples homes. Then it got sloppy and sour. Now they don’t know whats what and when asked to prove standing in court, they can’t. That’s fraud upon the court. Saying you have something you don’t. Saying you have skin in the game when you don’t. Everybody needs to stop acting like the poor mortgage companies may lose their money. They never had it to lose. Investors are the losers. Only they can’t keep track of them either. I feel if your mortgage fell into one of these gambling pools (without your permission I might add)and nobody can prove ownership of your note or mortgage, who do you owe? Whose fault is it?
May 5th, 2010 at 11:34 am
Why should this be any different than say, selling a car? When a car is sold to someone else, the title must be legally transferred. If someone said they ‘own’ that car, they would be required to produce proof that it actually belongs to them. You might pay the insurance, repairs and heck maybe even the car payment.. but it isn’t YOURS unless you can produce the proof. Why should this situation be any different? Without proof, this car (our house) could belong to anyone. Shouldn’t the Borrower know who they are buying it from?