Standard foreclosure proceedings have been put on pause. This article endeavors to provide instruction on how to cure one of the most frequently stumbled upon legal impediments to litigating these actionsthe lost note. Many foreclosure actions are sitting stagnant for months, or even years, as a result of not only a reticent judiciary, but also the lenders’ sloppy recordkeeping and loss of documentation evidencing their standing to foreclose on a secured property. A lost note, however, does not necessarily foreordain a losing case.
Many of today’s foreclosure actions are commenced, not by original lenders, but by parties who received the mortgages after a series of transfers. In the height of the housing boom, millions of mortgage notes were lost in transit, and the whereabouts of the original paperwork for each individual borrower is now anyone’s guess. As a result, since a lender must be the holder or assignee of both the mortgage and the note in order to foreclose,1 the “show me the note” defense to foreclosure actions became widespread, allowing defaulting borrowers to take advantage of the likelihood that the foreclosing lender or servicer does not physically possess the original note evidencing the right to foreclose.
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