By Gerri Elder
With foreclosures sweeping the nation in record numbers, many distressed homeowners are desperate for solutions.
Sadly, there are many mortgage rescue scammers actively working to deceive homeowners with promises of "proven" methods to save homes from foreclosure.
The truth is, filing bankruptcy is one of the few "proven" methods stop foreclosure.
However, some homeowners and a bankruptcy lawyer in Florida have made an interesting discovery that can effectively stall a foreclosure.
WGNTV in Chicago recently reported the story of a homeowner who, when faced with foreclosure on her home, requested the original mortgage documents. Surprisingly enough, the mortgage company couldn't produce them and the foreclosure was stopped.
During the housing market boom and refinancing rush, mortgages were repackaged, bundled and resold at a frenzied pace. In the chaos, many original mortgage documents were lost, destroyed or misplaced.
By demanding these documents, which may or may not still exist, some homeowners have delayed foreclosure while the mortgage companies scramble to locate them.
In some cases, court orders compelling the companies to produce the documents have turned up the heat for lenders to renegotiate the terms of the mortgage.
Florida attorney April Charney was one of the first to target lost mortgage documents in her quest to help homeowners stop foreclosure.
In 2006, Charney discovered that a company that filed a foreclosure against her client didn't actually own the loan.
Further digging uncovered the fact that the mortgage loan was sold after the homeowner defaulted - an illegal transaction. Charney went to court to argue that the mortgage loan was not valid.
Charney noticed that in almost all foreclosure cases she examined, lenders were filing "affidavits of lost notes." These affidavits are essentially a way of the company saying, "Trust us," when there may be no proof that it actually owns the loan.
Charney's strategy has been successful in some cases, by buying the homeowner time and increasing pressure on the mortgage company to lower the principal, fees and interest on the loan.
Word has spread about this tactic and bankruptcy lawyers in Maryland, New York, Massachusetts, Ohio, Kansas and Washington State have now adopted the practice to strong-arm lenders with slack record-keeping practices into modifying mortgage loans.
However, the success of the "produce the note" strategy may greatly depend on the bankruptcy judge overseeing the case.
Some judges are sympathetic to homeowners, while others are not.
Some judges will accept electronic documentation of the loan in lieu of the original, which mortgage companies usually have. Though, in most cases, even assembling the proper electronic documents can take some time, which is what a homeowner facing foreclosure needs most of all.
If you are facing foreclosure, a bankruptcy lawyer may be able to use this strategy to your advantage.
Total Bankruptcy can connect you with a local bankruptcy lawyer, which may help you explore your options. Call us at 877-349-1309 to connect with a local lawyer.