The Dog Ate My Note


Hi, Attorney Susie here again. One of my favorite professors in law school was A-OK with his students using the excuse “my dog ate my homework” to turn in a late assignment. However, in order to use the excuse, you had to produce the evidence proving your dog ate your homework. Not surprisingly, all of us opted to turn our assignments in on time rather than follow our dogs around after their “meal.”

It seems that during foreclosure proceedings these days judges are following my professor’s sage advice and requiring a foreclosing note holder (that’s you) to actually produce the ORIGINAL note to foreclose upon a property.

This isn’t standard practice in every foreclosure proceeding; it’s usually only raised when a borrower brings forth a defense asserting that the note holder doesn’t actually own the note.
OK, so what if a borrower DOES raise this defense and I don’t have the original note?

That’s where things could get a little hairy.

In most states, if you have filed a Lost Note Affidavit (LNA) along with a certified true copy of the note you MIGHT be out of the woods. Having a LNA and a certified true copy of the note will not guarantee a rubberstamp by a judge. Judges are now looking carefully at the LNAs to determine that authorized parties have executed the LNA and that it has been properly notarized.
A few examples: an unnamed bank submitted a LNA to a court and it was discovered that the LNA was executed in a different state than where it was notarized. Result: Foreclosure proceedings dismissed.

Here’s another one: a savvy judge figured out that another unnamed bank submitted a LNA executed by an individual with no authority to bind the bank. Result: Foreclosure proceedings dismissed.
Lesson to be learned: Devil is in the details–Make certain that your LNA is watertight!

Now you ask, what if I don’t have a copy of the note, can I just file a LNA?
Well, theoretically (we lawyers love theory) you can, but you would have to attach other documents to the LNA to prove that the note once existed. For example, you could provide a loan payment history, closing documents, and/or a sworn statement of the notary or escrow officer. Filing a LNA without a copy of the note is a HUGE gamble; every judge is different and it’s hard to determine how each judge will determine what evidence is needed to prove that you are the rightful owner of a note.

Most likely, if a borrower raises the defense that you are not the holder of the note and you don’t have a true and certified copy of the note, foreclosure is going to be a long, costly road.

You’ve read all this and now you’re asking yourself: I’m foreclosing on properties in non-judicial foreclosure states, why should I care?

The reality is that borrowers can raise this issue in judicial OR non-judicial foreclosure states. The principles are the same, but the procedures will be different.

To sum it up, don’t let the dog (or in this case, the bank) eat your note! When purchasing a note, make sure the seller can provide you with an ORIGINAL note – or at worst, a certified true and exact copy of the note, along with an LNA that is executed properly. If they can’t, DON’T BUY THE NOTE.

NOTE: The information presented in this blog is for informational purposes only, and should not be construed as legal advice. There is no intent to create an attorney-client privilege or relationship by reading this email and/or blog update.

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