Jun 15, 2009 4:30 pm US/Eastern
3 On Your Side: Show Me The Note
PHILADELPHIA (CBS 3) ―
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Ethan Miller/Getty Images
The headlines keep coming -- foreclosures are still at record highs.
Your Money Team finds as more Americans try to figure out ways to save their homes, there's a little known practice growing in popularity.
It's an interesting twist as they Survive In '09. 3 On Your Side's Jim Donovan has the details.
It's a strategy that some attorneys say, may buy homeowners valuable time.
"We built this house, you know, lived here, and it's the home of our kids, so it's a struggle," said homeowner Kerry McConnell.
When Kerry and his wife were facing foreclosure, their attorney advised them to use three little words, produce the note.
It means asking the lender to find the actual mortgage note, proving that you owe the debt.
"Produce the note is a legal strategy we use to force banks to show us that they're the proper party to foreclose," said attorney Jonathan Stein.
Seems like a simple request, but finding that piece of paper isn't always easy.
"In today's market, with huge banks and changes in the financial industry, it will sometimes take the lender three or six or even nine months or a year," said University of Iowa Professor, Katherine Porter.
During the last decade, it became common for one lender to sell a mortgage to another lender.
Experts say original paperwork was sometimes stored in hard to find locations, misplaced or accidentally destroyed.
"In 2007, I did a study of homeowners who filed bankruptcy to try to save their house. The note was missing 40 percent of the time," said Porter.
That missing note gives families like the McConnell's the right to ask the courts to block foreclosure until the lender can provide proof of the debt.
This gives homeowners precious time to re-negotiate a deal, find a new home or get their finances in order.
"It keeps hope in the back of our minds," said McConnell.
The McConnell's attorney says that this should only be used as a last resort and admits that producing the note has only worked for him about 35-50 percent of the time.
We're also told that many times, judges are willing to accept electronic documentation of a note, or other paperwork establishing a lender is the holder of a loan.
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