Wednesday, February 18, 2009

Asking For the Original Mortgage Documents Could Delay Foreclosures

Homeowners around the country are managing to stall the foreclosure process by simply asking for the original mortgage paperwork. 

During the past decade of the real estate boom, mortgages were sole and resold, bundled into securities and peddled to investors.  In many cases, the original paperwork signed by the homeowner was lost, stored away in a warehouse or destroyed. 

Convincing a judge to compel production of these hard to find documents can delay foreclosure allowing the homeowner to have some time and putting pressure on the lender to renegotiate the mortgage. 

Judges are often willing to accept electronic documents and lenders are sometimes allowed to produce other paperwork to prove they are the holder of the loan.  Still, gathering such documents takes time, which to homeowners is the point. 

A study done by the University of Iowa last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.