Three Words If You Are Being Foreclosed On

[rsmith6621]

http://www.yahoo.com/s/1035029


PRODUCE THE NOTE.....the original note.

[Wapsie B]

1. People here need to see this.

Thanks!

[Dennis Donovan]

2. Wow! That's a great way to stall (and hopefully prevent) foreclosure!

Recommended

[Xithras]

8. It can't prevent, it can merely delay.

The delay works at the moment simply because the banks are so backlogged with foreclosures, but those papers do exist somewhere. It's just a matter of tracing them back for each loan to figure out who actually holds the originals (or a digital copy). It may take a while, but they'll turn it up sooner or later.

This also only works if your lender was a reseller. If you financed directly with a company like Countrywide (which largely holds its own paper), they can pull up your docs in about 3 seconds.

[Hassin Bin Sober]

10. I'm pretty sure the company I used to work for lost a ton of their paperwork.

We grew from a local mom and pop shop to the second largest (32 states) brokerage in the country before we were bout out by Royal Bank of Canada and then Home123 and then ........the shitter - bankruptcy.

I'll tell you, in the 2000 - 2003 and beyond refi boom, that company was so disorganized it wasn't funny. The basement was overflowing with un-shipped files and un-cashed checks. Loan Officers were stealing the company blind because there was no automation - the IT department consisted of a couple high school grads who liked to tinker with computers.

We weren't the only company like that. I had friends working in operations for one of our big competitors - same thing. Lost files, un-perfected loans missing signatures etc. etc.

The investors we sold to (Chase, Countrywide, Citi etc.) were so slammed they were buying everything sight unseen.

I agree with you about Countrywide... to a point. They were tops in automation at the time but I heard some nightmare stories on their end.

[Xithras]

13. True, but even permanently lost papers would only be a temporary reprieve.

The bank doesn't lose their rights to the home just because they lost the paperwork. It would simply generate a new suit to legally establish the terms of the contract, which would probably open the homeowner up to subpoena's for copies of their paperwork too. At most, it would add 6-8 months to the process, and it would have the added disadvantage of costing the homeowner additional legal fees. If no signed copies of the original paperwork exist, from either party, there's nothing stopping the bank from claiming that the original terms called for a 20% interest rate and a $1000 a month late fee. The truth would have to be settled with lawyers in court before a judge, and banks have armies of lawyers on retainer. What kind of representation do you think a homeowner incapable of even making a mortgage payment can afford? The homeowner will be at an instant disadvantage.

It's unrealistic to expect that a judge is going to waive a banks right to repayment just because a paper was lost. It's a delaying tactic at best.

[Dreamer Tatum]

15. Amen

I have been present at a few arbitration meetings where the debtor challenged the existence of a car
note, to which the arbitrator replied, "I have electronic copies of fifteen consecutive monthly checks written by you,
each in the same amount, to your counterparty. Under what circumstances did you start paying that amount
to the counterparty?"

That tends to end all discussion about the legality of the debt. There mere act of paying on an installment
note establishes validity in most cases. The only value of the original note is to determine final liability.

[Hassin Bin Sober]

17. And my answer to that would be that I was ONLY obligated to make fifteen payments.

It may not be the end-all but it certainly opens things up to negotiation.

The contract MUST be produced to ascertain the circumstances under which the the property can be repossessed. In other words, I may owe you a debt, but that doesn't mean you can take my stuff. Installment contracts are VERY specific in how repossession takes place.

Without the contract, I don't see how one can legally enforce the terms. That's not to say there won't be some pro-business judges who will do just that.

[scisyhp1]

21. You don't challenge the existence of a note,

you challenge the ownership of it. You may have found a reason
tp doubt that you were paying the right party. You protect yourself
from possible emergence of another party asking for retroactive
payments from you by refusing to pay until the payee confirms
his ownership of the note.

[Hassin Bin Sober]

18. Even if I were to agree to your exorbitant terms, and I wouldn't, that STILL doesn't give you the...

....right to repossess. That's the issue at hand. I own that house/car. You only maintain a security interest based on THE NOTE ... and MORTGAGE (in the case of a home) - nothing else. How can you enforce something that doesn't exist?

As for the "teams of lawyers" stuff. I agree to a point but these homeowners seem to be holding their own by filing documents by themselves.

Standing pat doesn't seem an all too expensive proposition. Especially if the judge does his job and follows the law.

[Xithras]

19. Two simple points.

1) The lack of a note can be corrected by a judge ordering a new one. The bank is going to come in with an army of lawyers and computerized records showing that $X were originally paid out, that $Y were paid back in, that I% was the going interest rate at the time the loan was drafted and matches the payment amounts you have been making. The bank, at that point, merely needs to show that X + IX - Y > 0. That establishes the debt.

It IS possible that, with a savvy lawyer, a person might actually manage to get more favorable loan terms this way, but any change will likely be minimal because the basic math of Loan Amount Vs. Payments will clearly reveal what the original terms were. I'd be interested to see whether anyone can get a judge to alter an interest rate or terms this way, but it's clear that nobody is going to get a principal reduction. In theory, if the bank can't produce the original paperwork, it might be impossible for them to prove that someones 5-year adjustable wasn't really a 30 year fixed. On the other hand, simple math will reveal that a 15-year interest-only bith a balloon couldn't possibly be a 15-year fixed. I hadn't thought about that aspect.

You can expect the banks to fight it like hell though...most banks print the loan terms on their statements, and they'll subpoena everything from tax records to bank statements to prove that you knew what your original terms were. As an example: If you have an interest-only loan, 100% of your mortgage payment can be deducted on your taxes. If you claim that the loan wasn't interest-only, or that you didn't know it was interest-only, and the bank can show that you took the deduction for your full mortgage amount on your taxes, that will be treated as clear evidence that you were lying to the court. Good luck getting a favorable ruling at that point.

Or how about this angle...if the bank gave you $300,000 to buy that house and they can show that you only paid back $25,000, did you report the other $275,000 to the IRS as income? Failure to do so implies that you didn't view it as income, but as a loan. It also raises the interesting possibility that the homeowner could face jailtime for failing to pay income taxes if hell froze and a judge actually DID set the debt aside (or, if it was decided that the money was "gifted" at the time of judgement, the homeowner would find themselves owing taxes to the IRS for $275,000 in income for the current year...that's a lot of taxes to pay for someone who is already so broke they were losing their home).

2) These homeowners aren't "holding" anything against the banks at the moment. The banks are busy and it's simply taking time to get to everyone. When the banks do get around to dealing with these people, they'll get squished fairly quickly. They aren't winning, they're stalling. Eventually they won't be able to stall anymore, and the bank will win.

To paraphrase what I said in my other post: No judge is going to set a valid debt aside, simply because one paper is missing, if there is plenty of other evidence that proves the debt and that the debt wasn't repaid.

[Hassin Bin Sober]

26. All your math calculations, and I don't disagree with them, prove one thing:

The debtor owes the bank money. But it doesn't allow them to move against the property.

I'll disagree that you can prove the terms of the deal through extrapolation as you are suggesting. For instance, does your extrapolated loan have an acceleration clause in the event of a default? What constitutes a default? What, if any, is the grace period - 15 days? 5 years? What's the remedy for cure in the event of a default? Can the borrower, at his discretion, just start re-paying the loan or can the bank refuse to cure? What if the bank allowed the borrower to re-instate in the past? Does that set a precedent and require the lender to re-instate in the future? What are the late fees? Who pays attorney fees?.........all these, and many more, terms are spelled out in the note. Not just the rate and loan amounts.


My point is this: If the bank loses the instrument that secures the home as collateral for the loan, the bank is up shit's creek as far as their security interest in the property.

The loan, if you get that far, you thought was secured against the debtor's property is now UNSECURED.

I have spent 20 years in the retail lending business - 10 years in auto lending and 10 years mortgage.

I've never had a customer have me over the barrel in the mortgage business - the reason you don't get your money from the bank for 3 days in a refinance transaction of your primary residence is because if the buyer exercises his right to cancel the note and mortgage you just gave the customer a bunch of cash secured against nothing.

I HAVE been over the barrel in auto loan transactions and it isn't a pretty sight from a lender's prospective. That uneasy feeling you have when YOUR BORROWER has you by the short hairs sucks. It's even worse when HE KNOWS IT. The nature of the auto business is such that, unlike the mortgage business, a lot of stuff is done on the fly. People are put on the street with imperfect contracts - missing signatures, missing paperwork, denied credit etc. The name of the game is to get your customer to comply through a sense of fair play and, YES, bullying............but the worst thing you can ever do, is convey title to property without a valid contract to cash or a lien to perfect.

No judge is going to set a valid debt aside, simply because one paper is missing, if there is plenty of other evidence that proves the debt and that the debt wasn't repaid.

I don't think anything is under any illusion borrowers will get a free house. Also, I don't' think you will find a judge that will "set aside" a debt. But I strongly disagree that a borrower couldn't leverage the situation to their advantage for better terms, including lower rates/amounts and, at the very least, reinstatement of a loan the bank would otherwise refuse to re-instate........with late fees, attorney fees and adverse credit reporting waived.

[JuniperLea]

20. Countrywide sold a lot to WaMu

It could still get complicated.

[Stinky The Clown]

3. That needs to be made into a PSA!!!!

[NNN0LHI]

4. I wouldn't get my hopes up on this one

Its up to the judge to decide if the proof the bank produces is adequate.

Most judges are pro-business.

Don

[pokercat999]

5. Judges can be removed....one way or another.......nt

[dixiegrrrrl]

6. the Consumer Warning Network web page says: Service Unavailable.

[Hassin Bin Sober]

9. Maybe they found his original note?

[Danascot]

7. A couple of good resources

Despite the tone of the title, this article has a lot of detail that could be essential for someone facing foreclosure:

Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish

http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aejJZdqodTCM

This article lays out the foreclosure process step-by-step. However it doesn't mention the missing note tactic:

Headed for foreclosure? Here's what to expect

http://www.latimes.com/business/la-fi-covertimeline15-2009feb15,0,1760388.story?page=1

Legal stuff and various cases in the courts:

Judges, attorneys work to stanch foreclosures

http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202422931194

[AZBlue]

11. Anyone know if this works on all debts?

And in particular, student loans with criminal fees and charges?

[Dreamer Tatum]

14. It works on all contractual debt

But producing the note is pretty much a clerical challenge that buys a slight amount of time.

If you're being asked to pay a charged off credit card account, the odds that the original agreement
can be produced are small if the account is old, but pretty good if you just charged it off.

With auto loans, the notes are generally easy to produce, except for mom & pop buy here/pay here lots.

Beware, however, that there are risks to asking the lender to produce a note if you've been paying on the
account, particularly recently. There are judges who will ask you to explain why you're making payments
on a note that you claim doesn't exist. A lot of them.

[SOS]

16. This may be of interest

"Think credit-card debt is a problem? Take a look at the lives ruined through the corporate thug tactics, usurious fees and vicious harassment employed by some of the nation's largest student-loan providers in this shocking exposé from Collinge, founder of StudentLoanJustice.org."

The book is called "The Student Loan Scam: The Most Oppressive Debt in U.S. History - and How We Can Fight Back"

http://www.amazon.com/Student-Loan-Scam-Oppressive-History/dp/0807042293

[AZBlue]

27. I'm ordering it!

Thank you!! If I knew then what I know now, I would have just not gone to college.

[Ioo]

25. It Can, the Fair Debt Collections Act says you can ask for the Orginal Contract.

I had an ID stolen and used in 2000. I had debt collectors call me, and they gave me ALL SORTS of shit, I mean these people are scum. I said hey... produce the application for the card... nothing... they left me alone after that.

[AZBlue]

28. Thank you!

I'm just looking for something that will give me equal footing - I'm not trying to get out of my valid debts, but trying to make reasonable arrangements for them.

I'm sorry that happened to you - you'd think by now something more would have been done about ID theft! Hopefully it's not still plaguing you.

[earth mom]

12. K & R! And here's the website talked about in the clip:

http://www.consumerwarningnetwork.com/

[sarcasmo]

22. Does anyone know who owns GreenTree out of St Paul MN?

Our mortgage has been bough and sold four times in five years and GreenTree is the name now sending us our mortgage bill. I am curious because we find out next month if the wife is going on Disability Pension and I am not sure if we will be able to afford the house. This is all good information.

[helderheid]

23. Thank you - my mom lost her job last year and my dad last week - I really appreciate this

[Mr. Ected]

24. Not All States Utilize Judicial Foreclosure

Georgia, for instance, uses a system of non-judicial foreclosure. A lender, after providing written notification of the default and an opportunity to cure to the borrower, places an advertisement in the county tribunal for a month, and then auctions the property on the courthouse steps the following months.

This solution would simply not fly in non-judicial foreclosure states.