A few years ago, I was having lunch with the chief counsel for a large servicer. Our conversation was interrupted when his Blackberry rang. The conversation seemed to center around the negotiations with a borrower’s counsel regarding a settlement.
When he hung up he said these people just don’t seem to understand that if a deal has 45 terms and the other side only agrees to 44 of them, then you don’t have an agreement.
I thought for a second and said – you know, if you have to do 45 things to effectuate a legal foreclosure and you only do 44 of them, then you have an illegal foreclosure. The lawyer thought for a moment and said – I see your point.
A foreclosure is technically a lawsuit. In addition, the way our system works is the party suing must prove their allegations. Is it a technicality that they can’t produce the original note? Yes. Should the technicality prevent them from getting a judgment? Yes.
Mortgage notes are the same as bearer bonds; they are negotiable instruments or almost the same as cash. If you loose a $100 bill can you walk into a bank and sign a Lost $100 Bill Affidavit and get a crisp new $100 bill? No. If you loose a $10,000 bearer bond, can you walk into your broker’s office, sign a piece of paper, and get a new bond? No. This is why banks have safe deposit boxes.
The mortgage industry is the only business that can get way with loosing notes and not have to pay any consequences for being sloppy. The Lost Note Affidavit privilege should be eliminated.