New Legal Maneuver May Temporarily Stop Foreclosures

Kathy Lovelace of Zephyrillis, Florida was a few weeks away from losing her house to foreclosure, until she stopped the bank dead in their tracks.

She asked the bank to show her the original mortgage paperwork.

That did it. They stopped sending letters, stopped the procedure, stopped everything.

According to a story in the Associated Press, homeowners like Lovelace are throwing a wrench into the banks' plans to take their house by asking to see the original note they signed.

The banks created the mess by selling and reselling mortgages, which were bundled into securities, and sold again to investors. As a result, the original loan note was stored in some warehouse, has been lost, or was destroyed.

It's a legal maneuver that's driving the banks crazy.

"I'm going to hang on for dear life until they can prove to me it belongs to them," Lovelace told the AP. "I'll try everything I can because it's all I have left." Lovelace owns a $200,000 home near Tampa, Florida.

It basically involves getting a judge to make the banks produce the note. The banks have to delay the foreclosure until they can find it. This gives the homeowner some time to find a new option, or get the bank to renegotiate the mortgage.

Chris Hoyer is a Tampa lawyer whose Consumer Warning Network website has free court documents homeowners can use to file their request with the judge.

While the request is not always successful, those homeowners who manage to win it can stop the banks in their tracks for a while. Who knows what will happen if a bank is not able to produce the note at all though.

And since some banks have been more than a little eager to foreclose, and many refused to help homeowners a couple years ago when this first began emerging as a problem, I get a warm feeling of schadenfreude all over when I hear about banks being forced to play by the same rules they hid behind when they refused to renegotiate mortgages for thousand so homeowners.

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