Ticktin Minute July 18, 2016 – What is a “Lost Note” or “Produce the Note” Foreclosure Defense?

What is a “Lost Note” or “Produce the Note” Foreclosure Defense?

A “Lost Note” or “Produce the Note” strategy is a somewhat complicated defense issue that can vary from state to state, but relies upon the same underlying issue: proof. As any homeowner will tell you, there is a lot of paperwork associated with buying a home (usually in triplicate) and although most of us not only keep our copies but protect and safeguard them many banks simply did not. With some loan documents topping out at over 500 pages, it is easy to understand how even a small bank can lose important documents with so many applications being received and processed.

Making matters murkier for banks is the fact that many institutions have become interested in discharging these debts by selling them to other banks or debt collectors.  If the loan has fallen behind, more opportunities for careless or inattentive employees to lose important documents becomes a real issue. If the bank loses the note or fails to produce the note what happens?