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How to Prevent Foreclosure Using the “Produce the Note” Defense

Updated on May 11, 2010

Many homeowners are using the “Produce the Note” defense – very effectively I might add – to prevent foreclosure. Following is what this type of stop foreclosure tactic is.

Prevent Foreclosure: What is the Produce the Note Defense?

When you buy a home, you sign a promissory note with a lender to pay back the mortgage. Many homeowners don’t know it, but home loans are usually sold very soon after they sign on the dotted line. In fact, it’s not uncommon to get your first payment statement and have a completely different lender’s name on it that the one you had at closing.

This is because lenders routinely bundle home loans with other types of financial instruments and sell them on the open market. They could be sold to domestic or foreign companies – many times over.

As a side note, this is why so many firms were burned when the foreclosure crisis started – many of them had bought home loans – which, remember are routinely bundled along with other financial instruments ---- and were left holding the bag when homeowners started to default.

This led to bank bailouts for lenders and the Obama’s administration’s prevent foreclosure program (ie, Making Homes Affordable) for struggling homeowners.

But, I digress.

Because home loans are sold so often, it can be hard for lenders to track down the original promissory note. And, therein lies the foundation of the Produce the Note defense.

Why the original promissory note is critical to the Produce the Note defense?

Not to get too technical, but when anyone sues you (and that’s in essence what a foreclosure notice is, a suit to get you to vacate the premises), they must produce proof that: (i) the homeowner (you) signed the home loan (hence agreed to repay it); and (ii) that the lender in question is indeed the rightful owner of the property at hand (your home).

It’s akin to criminal proceedings where every defendant has a right to have his accuser face him in court.

Foreclosure Advice: Critical Info to Keep in Mind about the Produce the Note Defense

Many foreclosure lawyers caution that this is not a way to stop foreclosure forever; it is only a stop-gap measure. Although, many say they’ve used this defense to delay foreclosures for years for some of their clients.

Eventually, you will have to appear in court and a judge will render a decision as to whether you’ve won or lost this motion (motion for your lender to produce the note).

But, you can use this time – however long or short it is – to perhaps negotiate with your lender and/or come up with the money to save your home.

Learn Much More about the Produce the Note Defense

Find out more, eg, how justices around the country are treating this defense, what happens if you win this motion, what happens when you lose this motion, the steps involved in using the produce the note defense and foreclosure scams around this defense.

Learn More about the Produce the Note Defense in the CNN Video Below


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