Come on!

I have seen a few blips and conversations on cable news shows about the new stall tactic to stop a foreclosure. An angry politician from Ohio, a sleazy lawyer with an internet infomercial and a handful of folks who can’t make their mortgage payments have a new chant for their lenders.

 “Produce the note” and I am staying here until you do!  

 

All borrowers sign both a note and mortgage at the loan closing. A mortgage is the security instrument which is the lien against the real estate. The note is your personal promise to pay the loan. In a foreclosure, the bank can sell the home and pay off the mortgage. However, if the proceeds from the sale cannot cover the entire debt, there is a deficiency which the bank can collect on the note- your personal promise to pay the entire loan amount. The mortgage is recorded in the county clerk’s office where the property is located. The NOTE is kept on premises at the lenders office. Typically, original notes are sent to some storage facility in Kansas or somewhere for safe keeping. However, things get lost.

 

Under the law, a bank/lender must produce several documents in a foreclosure proceeding to prove they are the actual lien holder. The original note is one of them. When the lender cannot find the original, they send a Certified and True Copy of the note with an affidavit stating this is a good as the original. So, actually they do not need to show you the original, merely a certified copy.

 

So, what is this new stall tactic they are talking about on the Morning Show?  Nothing. It is short term viral idea that people think they can use to put off the inevitable. Perhaps it can get you a bit more time, but do not expect the judge to let you stay in the house until the find that original in Kansas. And please, do not pay someone a fee to help you chant “produce the note”. This can become another splinter business resulting from people’s pain and misfortune.

 

Dale Siegel