How to Use a "Produce the Note" Strategy To Prevent or Delay Foreclosure

A foreclosure can often be stopped or delayed.

When you took out a mortgage loan on your house -- whether conventional mortgage, adjusted rate (ARM) or subprime -- you signed a piece of paper known in the banking business as the "note". This signed notice is the legal documentation as to how much you owe on the mortgage and who you owe it to. Many banks are having difficulties producing the actual signed note during foreclosure proceedings, and this can possibly be used to your advantage if you are facing foreclosure.

Difficulty:

Moderately Challenging

Instructions

Things You'll Need

• A delinquent mortgage

1. Know the note's owner.

   In the modern world of complex mortgage transactions, an original mortgage may pass hands through several different banks and other financial entities. A single mortgage may even be sliced up or "tranched" so that the mortgage is held by several different investment vehicles. Under such circumstances, it is entirely possible that more than one bank will lay claim to ownership of the mortgage.

   In order to protect homeowners against the possibility of multiple claims, several organizations are advocating a "produce the note" strategy. That is, insist that anyone attempting to foreclose on your home shows you the actual, original signed note as proof that they are the actual owner of the mortgage.

2. Check foreclosure documents carefully.

   The documents you received to formally begin the foreclosure process ordinarily contain information about the original note. Make sure you are familiar with this language.

   Many foreclosure documents have a section titled "Re-establishment of Note" or something similar. The Re-establishment of Note language says that the bank can't find the original note and is stating that it would like to have the courts presume that the note really exists as described in the foreclosure documents.

   The language sometimes reads: "...the Mortgage note has either been lost or destroyed and the Plaintiff is unable to state the manner in which this occurred."

3. Put it in writing. You are well within your rights to insist that the bank that is trying to foreclose your house "produce the note" as a condition of foreclosure. Your insistence should be in writing, and it may help to follow specific formats and guidelines established by the courts in your community.

References

• Consumer Warning Network: Produce The Note "How-To"