Millions of Americans are caught up in the mortgage mess, with local foreclosure rates currently double what they were in 2008. But a little-known practice, which some attorneys believe can buy those racing to save their homes valuable time, is gaining popularity.
Kerry McConnell works in the automotive industry, and his monthly commission has taken a hit of late.
Facing Foreclosure? Ask Bank To ‘Produce The Note’
Millions of Americans are caught up in the mortgage mess, with local foreclosure rates currently double what they were in 2008. But a little-known practice, which some attorneys believe can buy those racing to save their homes valuable time, is gaining popularity.
Kerry McConnell works in the automotive industry, and his monthly commission has taken a hit of late.
“My salary decreased approximately $2,000 a month in the last year,” McConnell said.
This drop in income meant McConnell and his wife soon fell behind on mortgage payments. They tried to work with their lender but attempts were ineffective, and the couple found themselves facing foreclosure.
“We built this house, you know, lived here,” McConnell said. “It’s the home of our kids and it’s a struggle.”
The McConnells decided to contact well-known foreclosure attorney Jonathan Stein. He advised them to tell their lender to “produce the note” – or, in other words, find and show the couple the actual mortgage note stating they are in debt.
“Produce the note is a legal strategy we use to force banks to show us that they’re the proper party to foreclose,” Stein said.
The request to produce the note seems simple enough. But professor of law Katherine Porter claims finding the piece of paper can be difficult.
“In today’s market, with huge banks and changes in the financial industry, it will sometimes take the lender three, six or even nine months or a year (to find it),” Porter said.
During the last decade, it became a common practice among lenders for one to sell a mortgage to another, and Porter believes the official paperwork was often misplaced or accidentally destroyed in the process.
“In 2007, I did a study of homeowners who filed bankruptcy to try to save their house,” Porter said. “The note was missing 40 percent of the time.”
Families like the McConnells thus have the right to request that a court block foreclosure until the lender can produce the note. This gives them additional time to re-negotiate a deal, find a new home or sort out their finances.
“It keeps hope in the back of our minds,” McConnell said.
Porter and experts cautioned that the produce the note strategy is a gamble, and do not recommend home owners facing foreclosure practice it as their first line of defense.
Lazer Avtzon
Requesting a forensic audit is the legal term for asking the banks to produce the note. 80-90% of mortgages produced in the past 10 years have violations of the RESPA law, which if found, serve as a good leverage to get the banks to modify your loan. However, there is no guarantee you will find serious violations, and even if you do, you still need to prove hardship and at the same time ability to pay a modified mortgage if the bank offers one.
Using the RESPA law to merely avoid mortgage payments and forestall eventual foreclosure by the banks is extremely dangerous and not recommended.
Taking money for a loan modification upfront is also illegal.Loan modification companies can only charge if they performed a service.
If a company is asking for a fee upfront, or promising that you can keep your house even without paying your mortgage for 36 and even 48 months, be forewarned.
Anything that sounds too good to be true, usually is not.
We charge a $995 fee to perform the forensic audit and preapre your loan modification proposal for the banks. If approved, we charge one month’s payment of the previous mortgage or $2,500, whichever is greater.
We have many satisfied customers from the neighborhood, and in fact, from across the United States.
If you have reason to believe your loan may contain RESPA violations and you have a genuine hardship making it impossible for you to meet your payments, you can contact me at lazera@creditservices.com
Meir
BS:D
Ths is a BS stratedgy as the lender is foreclosing on the Mortgage and not sueing on the Note, (even tho initially in NY there must be a promise to pay (the Note) inorder to secure a Mortgage.
Sometimes
As a real estate pro, I can tell you that it only works sometimes. and very sometimes, probably 30 percent.
Art Zeidman
Consider the ethics of this and the mar es ayin before you try it. First: You actually did borrow the money and agreed to repay it and the bank agreed and helped you buy a home. Second: Whatever reason you can’t make the payment has nothing to do with the note. You were given a copy of the note at the closing. Third: You are a frum Yid who laughs at your banker and says that you’re going to pull a stunt to delay making payments. He thinks that Jews are cheaters and swindlers. Please don’t do it. Try to borrow from family, try to renegotiate, or as a last resort file for bankruptcy (it is a legalprocedure), but don’t shame the whole Jewish community.
Lazer Avtzon
TO other comments
You are absolutely right that this should not be abused. However, many people requesting loan modifications are turned down for no reason or simply ignored. By requesting the docs, you are obligating the bank to negotiate with you and provide a loan modification.
However, even in this, there are no guarantees as the banks can choose to ignore or stall you. At this point, you will have to contact the State Banking Department and file a claim, possibly to the extent you may have to sue the bank and hopefully get them to modify.
This should not be used to stop making payments or anything else that can lead to a Chilul Hashem.
To Ari Zeidman
It’s not cheating. It is a legitimate legal strategy. At the end of the day you’re still going to pay or lose the house. If banks can nickel and dime you for everything, you should be able to use your legal remedies too.