Stopping Foreclosure: What the “Produce the Note” Defense Is & How It Can Help You Save Your Home from Foreclosure (Or at Least Stall)
Many homeowners don’t know it but by the time they get back to their cars after they close on their home, their home loan has been sold to another lender. It’s a very common practice. And this is the foundation of what has become known as the Produce the Note defense for homeowners facing foreclosure.
Stopping Foreclosure: What is the Produce the Note Defense?
Because home loans are sold so often, when a lender goes to foreclose on a home, many can’t find the original promissory note signed by the homeowners at closing.
This original promissory note is the proof that: (i) the homeowner signed the home loan (hence agreed to repay it); and (ii) that the lender is indeed the rightful owner of the property in question.
Get an overview of the Produce the Note Defense in the CNN video below.
Mortgage Foreclosure Law: What Legal Experts Say about the Produce the Note Defense
Some foreclosure lawyers have used the Produce the Note defense to delay foreclosures for years. But, they warn, this strategy for stopping foreclosure is only a temporary, stop-gap measure.
Just in case you’re wondering, judges around the country are accepting the Produce the Note defense. Following are some links to some cases.
New York Times: Foreclosures Hit a Snag for Lenders
Judge Christopher A. Boyko of Federal District Court in Cleveland dismissed 14 foreclosure cases brought on behalf of mortgage investors, ruling that they had failed to prove that they owned the properties they were trying to seize.
Tampa Bay Business Journal: State Supreme Court Seeks to Relieve Foreclosure Pressure Valve
The Florida Supreme Court has amended procedures for filing foreclosure complaints involving residential property, requiring lenders and lawyers to verify ownership of the note and providing sanctions for false allegations in foreclosure complaints.
What Happens If You Win the Produce the Note Defense
If you win your case using this defense, the lender won’t be able to proceed with foreclosure unless and/or until they indeed produce the original promissory note. And, this is why it can take years – especially if your home loan was sold multiple times since you’ve owned your home.
As stated above, this is very common – particularly during the last housing boom when a lot of home loans were packaged with other financial products and sold as securities to firms all over the world. Who knows where the original promissory note is.
What Happens If You Lose the Produce the Note Defense
If you lose your case using this defense, you will have gotten some extra time in your home – time that could have been used to come up with extra money to perhaps save the home or negotiate with the lender for more affordable payments.
This is why it’s important to know that this is only a temporary measure. Take advantage of the time you have to try to save your home.
Stopping Foreclosure: The Steps of the Produce the Note Defense
Step 1: File a Request. When you receive the foreclosure notice from your lender, immediately file a request with the court asking the lender to produce the original promissory note.
Step 2: File a Motion. If the lender hasn’t responded to your request within 30 days, then file a motion to compel them to produce the note. What this is is a request for the judge to order the lender to produce the note.
Step 3: Go to Hearing. After the requests and motions have been filed, usually you’ll receive notice to appear at a hearing. At this hearing the judge will render his decision as to whether you’ve won or loss, so you’ll proceed accordingly.
Foreclosure Scams Involving the Produce the Note Defense
All that’s needed to use this defense is the filing of a few forms. Hence, some online outlets have popped up that offer them for a fee. You don’t have to pay a fee to file the Produce the Note defense.
You can get the Produce the Note forms free at the Consumer Warning Network.
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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.