Can I File a Lawsuit for a Lost Mortgage Note Affidavit in Virginia?

Virginia foreclosure law provides for filing a lawsuit regarding a lost promissory note. An owner whose property is being foreclosed based on a lost note can petition the Circuit Court for an order protecting him from having more than one person claiming to own the lost note. This procedure can prevent a foreclosure from proceeding until the owner is adequately protected, but it will not necessarily prevent the foreclosure from eventually taking place.

Secured Promissory Notes

A promissory note is often secured by real property either through the use of a deed of trust or mortgage, usually in conjunction with a purchase of the property. If the owner of the property defaults in paying on the note, the holder of the note -- typically a bank or mortgage lender -- can foreclose on the property in lieu of filing a lawsuit against the owner to collect the balance of the promissory note. The foreclosure of the property is handled by a foreclosure trustee, who needs be in possession of the original note and a copy of the recorded deed of trust securing the note.

Lost Promissory Note

It is not unusual for the original promissory note for a real property mortgage to be lost or misplaced. This is often the result of the mortgage being sold from the original lender to another lender and then resold several more times. By the time the current lender entitled to receive payment of the note decides to foreclose, the original note cannot be located. Although Virginia law precludes the lender from suing on the note, the lender can still foreclose on the property securing the note.

Virginia Foreclosure Requirements

Prior to starting a foreclosure based on a lost note, the lender entitled to payment of the note must first comply with the requirements of Virginia Code Section 55-59.1(B). The lender must send a notice to the person responsible for paying the note -- typically the property owner -- stating that the original note is unavailable and that a foreclosure of the property will be started within 14 days. The notice must also include a statement advising the owner that, if he believes he may be subject to a claim by someone else (e.g., a prior lender) regarding the note, he can petition the Circuit Court for an order requiring the lender to provide adequate protection against any such claim.

Stopping the Foreclosure

Virginia law gives the court authority to condition any foreclosure sale on the lender providing the property owner with adequate protection against any loss that could occur by someone else making a claim for payment on the lost note. The code section does not define "adequate protection," but does state that it can be made by any reasonable means. (See Reference 3 - subsection (B)) Although this may have the effect of delaying the foreclosure, it is unlikely to prevent it from occurring at some point. However, if the lender cannot produce the original note, it may indicate that the lender does not own the note, which may be grounds to stop the foreclosure.

References

• Commissioner of Accounts for the Circuit Court of Henrico County, Virginia; Accounts by the Trustee; Edwin A. Bischoff; 2011
• MichieHamlett Attorneys at Law: Recent Developments in the Law; Edward B. Lowry, et al.; 2011
• Virginia Legislature: Virginia Code § 55-59.1 (B)
• Commissioner of Accounts for the Circuit Court of Fairfax County, Virginia: Affidavit for Lost Note
• The Charlottesville "Legal News" Blog; With No Interest In Debt, Bank Can't Foreclose; Deborah Elkins; February 3, 2007