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mkc1959
mkc1959, Lawyer
Category: Real Estate Law
Satisfied Customers: 519
Experience:  Practicing attorney with 26 years of experience.
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What will happen if my mortgage company cannot produce a deed

Resolved Question:

What will happen if my mortgage company cannot produce a deed to my house or the note? I noticed that they never filed a deed on my property and when I asked them for a copy of the note they just keep telling me they have it but they will not give me a copy of it.

Long story short they have the right to foreclose on me right now but for some reason they are not doing it and I cannot figure out why. Could this have something to do with it? If they cannot produce the deed or note what does this mean for me?
Submitted: 3 years ago.
Category: Real Estate Law
Expert:  mkc1959 replied 3 years ago.

mkc1959 :

Well you certainly have an interesting situation. The inability of the bank to produce the promissory note will certainly slow them down. However, it is possible for the bank to prove the debt in other ways such as producing a copy of the note and providing evidence that it is an exact copy of the original note. This may be difficult if you opened the loan with one bank and the loan has been sold or conveyed to one or more other banks.

mkc1959 :

The Bank will also have to prove it has a mortgage or deed of trust on the property. Again, this could be difficult depending on the circumstances.

mkc1959 :

There are attorneys around the country that defend foreclosure actions by first of all using the tactic of forcing the particular bank to "produce the note." If your lender tries to proceed with foreclosure, I would urge you to find an attorney in your local area to help you defend the foreclosure and perhaps negotiate some resolution with the lender.

mkc1959 :

If this has answered your question, please hit the accept button. If you have additional questions, please let me know.

Customer:

You have no idea! I have not made a mortgage payment in 3 years! I have been calling THEM trying to work something out. They just don't seem interested in talking to me! I was denied the Making Home Affordable Program TWICE because they said I did not make enough money...hmmmmm $7000 a month isnt enough money on a $3,250 payment and NO debt? I asked the gal how much I needed to make and she (of course) couldn;t answer me because it wasn't in the script! It's been a frustrating road. Yes I have been living mortgage free but I just want to know if I can keep my house or not. At this stage I am $117,000 behind in payments! I want to do the right thing and move on with my life. At this point with over (36) 30-day lates, my credit is probably not even registering and if they are going to eventually be able to foreclose, do I want to drag it out!!??? I want to keep my house but they just wont talk to me.

Customer:

Someone said "wouldnt it be great if they have no deed and no note and you could just own your home free and clear?" Yes that would be GREAT although I can't see that happening. CAN IT?

Customer:

It started 3 years ago where we had total loss of income and were drowning. I tried to talk to them for over a year before we even were forced to file BK. So now we have no debt and can easily continue to make this payment but why should I do the right thing and start paying them and then they foreclose after they get $40k from me? ARGHH! VERY FRUSTRATING! I even emailed the CEO of Citimortgage (that is who we are dealing with). That is when I got a response from a woman who is part of the EXECUTIVE RESPONSE TEAM. That led me nowhere.

mkc1959 :

I am trying to look something up.

Customer:

ok cool. Thanks!

mkc1959 :

According to the attorney, the produce-the-note defense has not been accepted in the non-judicial foreclosure setting in Arizona. However, your situation is much different -- because apparently Citi does not have a deed of trust or mortgage recorded. Without a recorded deed of trust and without the original -- or some substitute form of proof of the lost instrument -- Citi could never prove that it has a lien against your home.

mkc1959 :

Without a lien against your home, Citi could attempt to prove the debt itself based on the promissory note -- again by attempting to provide evidence of the lost note. If successful, Citi could get a judgment against you for the amount owed under the note.

mkc1959 :

In Arizona, there is a homestead exemption for $150,000 of equity in a home. Thus, if Citi got the judgment, and if you have more than $150,000 of equity in the home, then Citi could file a petition to judicially foreclose its judgment in an attempt to recover whatever value there would be in the home in excess of the first $150,000 of equity. That would be a rather circuitous route to attempt to recover on their debt and would not allow them to recover the first $150,000 of equity.

mkc1959 :

There is no way at this point to give you the certain answer that you would like to get for planning your future actions. Has Citi ever sent you a letter stating that the entire principal balance is due and owing at this time?

Customer:

Without getting too wordy which I tend to do ( :D) I owe Citi a principal balance of $645,000 plus now the $117,000 in back payments. My house is comping out at around $325k. I seriously doubt this house will be worth that amount of money ever again so if it's equity they want, they are barking up the wrong tree here.

Customer:

The only mode of communication that has happened since they denied me the Making Home Affordable Program over a year ago is that

Customer:

oops...sorry

Customer:

let me finish here...

Customer:

about 4 months ago my BK attorney forwarded a letter to me from Citi's attorney saying that I owed them $2,987 in post bankruptcy fees and if I did not pay it within 5 days they would file a motion to lift the stay. So I asked them what the fees were for (because this sounded so ludicrous to me) and they gave me a little list of fees. I said "ok. i will pay it". So I was on my way down to get the cashiers check and my BK attorney called me and said "i am advising you not to pay it because even if you do, they can turn around 20 days later and file the motion to release the stay so don't waste your money". So I didn't pay it. I never hear from them again and my attorney said that as of 2 weeks ago they have still not filed the motion.

Customer:

that is why at this point i am thinking something is holding them back from coming after me. First, they talk to me for 6 months trying to get me qualified for the Making Home Affordable Program then in my phone conversation with the ditz who told me I did not qualify I started asking questions she could not answer and I backed her into a corner all of a sudden she said "OH! I SEE YOU FILED BANKRUPTCY! I CANNOT TALK TO YOU! I HAVE TO FORWARD YOU TO THE BANKRUPTCY DEPARTMENT" and I said "well you have been talking to me for 6 months why is this an issue now?" and then CLICK she was gone. I got cut off, never got to the BK dept but when i called back i left several messages and nobody will talk to me. Something is definitely up.

Customer:

oh...then they send this letter from their attorney threatening to lift the stay. I asked that attorney to have her client provide me with a copy of the note. She said "oh we have the note" and I said, "ok will I would like a copy of it". She never got it to me or my BK attorney and then after I didn't pay that $2,900 bucks i never hear from them again....hmmmm. All very strange.

Customer:

So I just went to the link you sent me. Interesting stuff. Led me to a case which could be of interest to me accept there was a note. But there is also an attorney noted with his phone number. You are not a licensed attorney in AZ correct?

mkc1959 :

No I am not licensed in Arizona. It did look like the attorney that wrote that article was pretty familiar with the issues in Arizona. I guess right now, with the bankruptcy still pending, they just have you "running on a treadmill." From a planning standpoint, if and when they file a motion to lift stay, out here in our bankruptcy court, you would have at least 30 days after the motion was filed before there would be a hearing. Then, assuming the stay got lifted, the bank would have to start in on the non-judicial foreclosure process. I don't know how long that would take in Arizona but would assume you would have at least another 30 days before they could hold the foreclosure sale. Until the foreclosure sale is held, if ever, you would not have to vacate the house.

mkc1959 :

Have you checked the real property records to see if a deed of trust is recorded on the house? Or are you assuming none is recorded because the bank cannot produce one?

Customer:

Well I just called that law office and talked to a gal there. Very helpful. She is going to run my situation by Steve Vondran and see what he says. If and when Citi makes a move I guess I will call him. I'm sure this is going to take a long time. I am in no hurry because if I had initially been in a hurry, I would not have been living here for the past 3 years!

Customer:

Yes I have checked public records myself. There is no deed recorded.

mkc1959 :

Well I hope I have been of some assistance to you. If you have additional questions, I am glad to respond. If this has helped you and you are satisfied, then please hit the accept button so that I may get credit for this discussion. Sincerely.

Customer:

Yes. Thank you very much for your help. Keep up the good work! :)

mkc1959, Lawyer
Category: Real Estate Law
Satisfied Customers: 519
Experience: Practicing attorney with 26 years of experience.
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