Remember those documents you signed at your last loan closing? Your mortgage company sent you a copy or maybe, if your mortgage company was particularly efficient, it emailed you a copy. You probably assumed that your mortgage company was safely storing the originals. Not so fast, assume nothing with the chaos inherent in the home mortgage over the last few years.
Time Magazine chronicled the story of a Florida man who has stayed in his home for over two years without making a mortgage payment because his mortgage company could not find the original promissory and mortgage. The originals are typically required to convince a Court to grant foreclosure. In the process of investigating this particulary homeowner’s case, Time discovered something that is not surprising:
Just how bad is the problem? TIME dug into the mortgage of one troubled borrower. What we found suggests that many promissory notes are not lost. In an effort to rush homeowners to foreclosure, and hide damaging information, bankers’ have needlessly created a huge legal mess that once again questions the financial industry’s credibility and ethics. “They [banks] don’t comply with the law when they’re taking people’s homes,” says Michael Olenick, who owns Legalprise, a legal research firm.
It is not surprising to me because I have witnessed shoddy work by mortgage companies that want to enforce their legal right without providing the homeower with their rights. If it is documented in this case by Time, there are probably quite a few more cases where poor record-keeping leads to a breakdown in the process.
The lessons for homeowners? Keep copies of the documents you sign and know your rights in the foreclosure process.
You can read the entire Time article here.