Find The Note

Roughly one of every three mortgages has been found to have a considerable legal discrepancy and this is most notably because a substantial amount of loans are bought, sold and assigned to a third-party.

Most homeowners look to the lender as the owner of the mortgage loan – Wrong!

Individual mortgages are often bundled into pools of similar mortgages and sold on the market as a mortgage backed security (MBS) or investment. After your mortgage loan closes and paperwork processed, your lender probably outsourced the job of managing your loan to another third party company called a SERVICER.

The nation’s four largest banks – JP Morgan Chase, Wells Fargo, Bank of America, and Citibank – are the largest mortgage servicers.

Mortgage servicers have a long list of administrative responsibilities, from collecting monthly payments, maintaining detailed accounting records, paying taxes and insurance premiums, and distributing payments to the investors. For this work, they receive a servicing fee.

The problem with many servicers is that they often fail to maintain proper records. And the fouled-up paperwork and other lack of legal compliance have resulted in a much higher rate of negotiated mortgage modifications.

Each time millions of mortgages are sold the paperwork should exchange hands to the new investors and new servicers; yet this rarely happens. This makes it all the more difficult to decipher the true holder of the mortgage.

So what does this mean for the Homeowner?

When lenders wish to foreclose on a homeowner, the law typically requires them to produce original, signed documents including the mortgage and loan note. While the mortgage documentation is on file at the local courthouse, the note is often lost or misplaced, particularly if the mortgage has been sold. The “missing note” has become a tool for those homeowners who face foreclosure.

Keep in mind, there are varying state laws so while a few states require foreclosure proceedings to go through a judge, there are states that leave it up to the homeowner to file motions to fight on their own. You must be knowledgeable in what to do, what to ask for and what to argue or you can count on running up legal bills for an attorney’s help. And if you’re losing your home, you should get the help of an attorney.

Chances are the lender or servicer cannot put their hands on that original note and any legal proceedings will have to be delayed until they do.

Be proactive; learn everything there is to know about where your money is going and whom are the responsible parties when it comes to your home. Never wait until the last minute to learn how to protect your home and your interests.