There unfortunately has been an epidemic of these types of situations happening... a bank does not actually "hold" a person's mortgage but they bring forth foreclosure proceedings against you.
Have you already lost the home? Has the foreclosure sale gone through? If so, it is unfortunately a bit more difficult to challenge after the fact, but I would highly suggest speaking to an attorney, especially one who knows land law. If you can find one that deals with foreclosure cases all the better! (but that is harder to come by)
If you are still in the middle of the foreclosure process, make sure that you challenge the validity of the foreclosing party. State have specific foreclosure laws which require the party foreclosing to PROVE that they have physical possession of a mortgage note and can enforce it among other requirements. Definitely check your local state laws and procedures.
Hope that helps!