Consumer Warning Network has advice for homeowners faced with foreclosure: Ask the judge to compel the bank to produce the mortgage note. While production of the mortgage note in a foreclosure case may seem routine, Consumer Warning Network is telling consumers that many banks can’t produce their mortgage notes. And without the notes, banks can’t prove they are the rightful owners of the property, entitled to bring foreclosure proceedings.
Rhode Island Attorney General Geoge Babcock is one of many public advocates who has been successfully fighting foreclosures by obtaining temporary restraining orders precluding foreclosure by banks which have not produced mortgage notes, Consumer Warning Network says. When the cases go to hearing, the embarrassed banks are sometimes walking away, losing by default. Homeowners are thus able to remain in their homes.

Where are the missing mortgage notes? The real estate crisis that set the nation’s economic downturn in motion – with its whirlwind of expedited transactions and repeated transfers of mortgage notes, with many notes being bundled and sold to investors- led to notes not being completed, getting lost or sent to storage, never to resurface.

The Associated Press reported Tuesday that foreclosure threatened more than 2.3 million homeowners in 2008. While the number saved by strategies such as the Consumer Warning Network’s produce the note cannot be determined, anecdotal stories suggest that the occurrences are reasonably common. AP cited a case in Tampa and 14 cases in Cleveland where foreclosure proceedings abruptly ended upon banks’ inability to produce mortgage notes. A Jacksonville legal aid attorney claims to have gotten 240 foreclosures dismissed due to banks’ inability to produce mortgage notes. A University of Iowa study cited by AP suggests that mortgage notes may be unavailable in as many as 40% of foreclosure cases.

Not only might homeowners base foreclosure defenses on banks’ability to produce mortgage notes, in some cases, with the bundling and sale of notes to investor pools, there is a question as to who the owner of any particular mortgage note is and thus who has standing to bring the foreclosure action.

Mortgage Servicing Fraud is keeping a record of foreclosures dismissed due to missing mortgage notes. It also tracks cases of other irregularities such as holders of mortage notes without an ownership interest in them improperly initiating foreclosure proceedings.

If you are subject to a foreclosure action, careful attention to detail may buy you enough time to work out a solution or may help you avoid foreclosure altogether.