Homeowners Try New Tactic to Hold Off Foreclosure

February 19, 2009 12:32 PM
by Lindsey Chapman
A nationwide “produce the note” trend is helping some homeowners avoid foreclosure, or at least delay proceedings long enough to potentially find a solution to their problem.

“Produce the Note”

As they attempt to fight foreclosure proceedings against them, many homeowners have spotlighted an issue central to the housing problems that have plagued the country, according to the Associated Press.

Mortgages have been sold and resold during the “real estate frenzy of the past decade,” and in several instances, the original note the homeowner signed has been lost, stored somewhere or destroyed.

If homeowners facing foreclosure can get a judge to require the production of this “hard-to-find or nonexistent” information, they may be successful in delaying proceedings long enough to convince a lender to renegotiate their mortgage.

“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Chris Hoyer, a lawyer who helped promote what’s known as the “produce the note” strategy, 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.”

A spokesman for the American Securitization Forum says the idea is “merely a stalling tactic,” according to KDVR-TV. Many loans are documented electronically, which is generally satisfactory for judges.

Homeowner Kathy Lovelace was about to lose her home when she decided to ask her lender to produce the note to her home. The bank reported that her original paperwork had been either lost or destroyed and “just like that, the foreclosure proceedings came to a standstill,” the AP explained.

“I’m going to hang on for dear life until they can prove to me it belongs to them,” Lovelace told AP.

Congresswoman Marcy Kaptur of Ohio also has advice for homeowners in danger of foreclosure. “So I say to the American people, you be squatters in your own homes. Don’t you leave,” columnist Amy Goodman quoted her as saying.

“[P]ossession is nine-tenths of the law,” Kaptur told Goodman. “Therefore, stay in your property. Get proper legal representation … [if] Wall Street cannot produce the deed nor the mortgage audit trail … you should stay in your home. It is your castle. It’s more than a piece of property.”

Related Topic: President Obama’s help for homeowners

President Obama recently revealed a $75 billion plan to help homeowners struggling with expensive mortgages, according to the Chicago Sun-Times. His plan also doubles a federal guarantee for “mortgage giants” Fannie Mae and Freddie Mac, to increase mortgage availability and ease the refinancing process. The Sun-Times cited an estimate that 27 percent of the 52 million homeowners in the United States owe more on their property than it’s worth.

Reference: Consumer Warning Network


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