« Welcome to Guest Blogger Jim Hawkins | Main | The Origins of Medical Debt »

Produce the (Bogus?) Paper

posted by Katie Porter

 In 2007, I wrote an article showing that notes and mortgages were often missing from bankruptcy mortgage claims, despite a clear rule that they should be attached. That finding did not establish that companies do not have such documentation. At that time (a long-ago era of blind faith in commercial entities), some people suggested to me perhaps creditors simply do not wish to be bothered with the time and expense to comply but that all transfers were valid. In the intervening years, story after story has emerged about mortgage servicers who brought foreclosure cases without being able to show their clients had a right to foreclose. Homeowners, desperate to stave off foreclosure while negotiating for a loan modification or waiting for HAMP to become operational, are increasingly demanding that lenders "produce the paper." In legal terms, this means the servicer should show that it is the authorized agent of a trust or other entity that is the holder of the note and the assignee of the mortgage.

Upon challenge, many companies have been unable to show they had the paperwork, leading to their cases being dismissed (see here, here and here for some examples). The hard part has been to figure out the longer term consequences of lacking a proper chain of negotiation and assignment. What is the effect of an assignment of a mortgage in "blank"? Is this an incomplete real estate instrument that has no valid effect, similar to a deed without a grantee? Can parties go back after the fact and create assignments today to correct problems in transfers from years ago (and if so, what about when the chain of title involves a now defunct lender or bank? what about corrections to chains of title made after the debtor files bankruptcy and the automatic stay is in place?)

Lenders and their agents seem to busy churning out assignments to repair defects and create a paper trail. Of course, with all this paperwork creation, there are bound to be some slips-ups. Follow this link and click on "view image" to see the public recordation of an assignment "for good and valuable consideration" of a mortgage to "Bogus Assignee for Intervening Asmts, whose address is XXXXXX." If this works to assign a mortgage, what is the purpose of requiring assignments at all?


As a practicing California lawyer, I have often wondered whether all of these "produce the note" defenses do any LONG-TERM good. Yes, foreclosures get stopped FOR A WHILE, but, ultimately, the borrower still has to pay the loan in order to keep the house. I've yet to hear of anyone actually getting permanent relief from a mortgage bottled up in the courts this way -- either in part or in full. Also, in states like California, which have non-judicial foreclosures, the "produce the note" defense seems to have limited utility, because it is the BORROWER who must commence litigation in order to stop the foreclosure. Sure, this all works in Florida, which has ONLY judicial foreclosures, but I hear the banks are lobbying like crazy to start non-judicial foreclosures in that state because they know that it will end their foreclosure defense "nightmare."

In Illinois, which is a judicial foreclosure state, it is not so much "produce the note" but it is "produce evidence that you or your agent are the holder of the note and the assignee of the mortgage." And in many cases, the foreclosing entity on behalf of these securitized trusts has difficulty doing so, sometimes resorting to Ms. Porter's aptly described "Bogus" assignment.

In some cases, these assignments are actually executed subsequent to the filing of the foreclosure complaint (when the lender realizes the foreclosure will be contested). As a matter of standing, it is a tough argument that evidence manufactured after the date of the complaint must be accepted as evidence of standing or capacity at the time the complaint was filed.

The meta-issue seems to be whether the legal and financial systems can withstand successful challenges to the standing and capacity of lenders or their agents to foreclose mortgages. Regardless, state law (at least in Illinois) has been slow to respond to the challenges posed by foreclosure of securitized mortgage loans.

Another hot topic is Motions for Relief from Stay where the property is encumbered by a mortgage and note that have been securitized, and the debtor's attorney decides to contest standing. While I'm not aware of any decisions by N.D. Ill. judges on these issues, there seem to have been a handful of BK cases around the country resolved in favor of debtors and the Motion for Relief denied. This could become a bigger issue nationwide, on both state and federal levels, as more of these cases make it through appeal.

These assignments are all over the country.

See in the link below...



I'm using these arguments in a chapter 13 case for one client to object to a proof of claim filed by a loan servicer; and to obtain a cramdown of the mortgage.

Their are uses in bankruptcy practice in California, but civil litigation is very expensive. A chapter 13 bankruptcy is the best way to stop a foreclosure in CA.

Couple of points to address here:

Atty Wuhrman, while the "produce the note" defense - more accurately known as Article 3 of the Uniform Commercial Code - may not solve a long term problem, when original notes cannot be produced the immediate entity is shut down from foreclosing b/c they simply have no legal standing to do so. At that point, since
it is known that the original note cannot be produced, among other actions to be taken, it may be prudent for a borrower to file a quiet title action to further protect themselves long term. Regardless, neither judicial/non-judicial status of a given state nor a borrower's status as plaintiff or defendant should be of significant concern at least as far as evidence is concerned.Legal strategy is, of course, an entirely different matter.

Now, the documents that 4closurefraud provided the link to are all absolutely significant and many of them are specifically relevant to the example that Prof. Porter provided. To wit:

Prof. Porter's doc:

Linda Green
Vice President
American Home Mortgage Acceptance Inc.
Document Prepared by: Ron Meharg
Document Returned to DOCX

Several of 4closurefraud's docs at http://wp.me/pFWnq-r9 :

Linda Green
Doc Prep: Ron Meharg
Doc Return to: DOCX

Linda Green
VP Arbor Mortgage
Doc Prep: Ron Meharg
Doc Return to: DOCX

Linda Green
VP & Asst. Secretary American Home Mortgage as Servicer Deutsche Bank National Trust Co. as Trustee for Ameriquest Mortgage Securities Inc. Asset Backed Pass Thru Certificates Series 2005-RI
Doc Prep: Ron MEharg
Doc Return to: DOCX

Linda Green
VP West Coast Lending Corp
Doc Prep: Ron Meharg
Doc Return to: DOCX

It appears, at first glance, that Ms. Green's employment history is similar to that of one Scott Anderson of Ocwen Loan Servicing and one Laura Hescott of Fidelity National Information Systems/Lender Procesing Systems among other individuals of questionable employment status. If memory serves, both individuals were called into question by NY Supreme Court Judge Arthur Schack within the last few years. Without conducting any research of any kind, my money is on her being an employee of either MERS or DocX.

I may be mistaken, but I believe that there are larger issues than simple lack of standing happening in individual foreclosure cases. Fortunately, victims are catching on and documents are being compiled in various locations around the country and across the web. Signatures are being compiled as well for authenticity.

I practice in New Jersey. I raise the note issue in every case and the judges here by and large just don't care. I was in court last week on a case where the plaintiff produced a note specifically endorsed to entity A, but the plaintiff with the assignment was B. The judge blew my arguments out of the water and gave plaintiff's counsel three weeks to come up with an allonge or a new endorsement. Talking about inviting bogus documents. In other cases where there are no endorsements, in blank or otherwise, but there are assignments, the judges have also looked at me like I have two heads. The bottom line for most of these judges is that the client signed a note and isn't paying. My only hope is that when some of these cases get to the appellate level, the judges will read Article 3.

Attorney Levitt, see if these cases do anything to help your argument out. Just make sure that you prepare your clients for an appellate argument so they aren't surprised by it and can prepare mentally.



And while I'm at it, Home Equity Theft ALSO posted yet one more story on the "multiple hat wearing VPs" like the aforementioned Linda Green, with docs also available, courtesy of 4closurefraud, this one being one Erica Johnson-Seck.


I have no legal training but it strikes me that if foreclosures are being allowed even when the required documentation is incomplete or obviously faulty, then there is misconduct on the part of the judiciary. Is there no criticism of the judges allowed? Do the people have no recourse in these matters? Where is the rule of law, etc.?

Just asking.

Ownership of property is, I believe, one of the foundational stones of freedom and liberty. The defective, deceptive and illegal practices being engaged in by foreclosure plaintiffs are absolutely shattering that stone.

The prior comment of george makow points out the deficiencies in our judiciary. Having been involved in litigation myself for 2 years, and having been met with virtually no interest by the court in any of the legitimate arguments I have put forward I am quite flabbergasted at the courts behavior.

I have researched land records in my jurisdiction and have seen first hand examples of these "Bogus" assignments. It boggles the mind.

Produce the Note does work and it should. No foreclosure should proceed without full proof of ownership. In these days of fraud its imperitive. Judges here in Florida are adhering to the law and starting to put the banks feet to the fire!

The comments to this entry are closed.


Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.



  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless ([email protected]) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.