Homeowners’ stave off foreclosure with: ‘Show me the note’

Tweet

April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, has had much success with this tactic, especially in the face of Florida's Rocket Docket. http://chattahbox.com/us/2009/02/18/homeowners-stave-off-foreclosure-with-show-me-the-note/ Homeowners around the country are managing to fend off foreclosure by employing a strategy that goes to the heart of the real estate mess. By asking banks to show the original mortgage paperwork, foreclosure proceedings often come to a standstill. During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed. Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage. More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers free court documents, has played a major role in promoting the produce-the-note strategy. “We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.” Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.” Deutsch said the original note is almost always electronically retained and can eventually be found. However a University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out. The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes. April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find. “This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions,” Charney said. “Nothing good is going to happen as long as we continue to bleed homeowners.”