Can You Stop Foreclosure If The Bank Loses Your Note?

I wish I had a dime for every time a client has  asked me to stop their Lender’s foreclosure because the Lender lost the original Promissory Note to the Mortgage.    The Note is the “IOU” or promise you make to pay the Lender over a period of time, usually 30 years.  It is indeed important, and you would never want to sign more than one per loan without making a notation on the 2nd and all subsequent copies  that all Notes you sign after the first one are only duplicates.

Despite, or perhaps because of,  some very consumer friendly cases in a few other states, the Lender lobby in Virginia had the legislature create a procedure which gives the Borrower some protection but ultimately shifts the burden of finding the original Note off of the Lender!  If the  Lender or the Trustee follow the minimum notice requirements to the Borrower and the Borrower is not able to prove a genuine likelihood of multiple Lenders trying to recover the same debt from the Borrower, then the lost original Note is irrelevant.  What the law does in Virginia is shift the burden of proof from the Lender to the Borrower.    Foreclosure will ultimately go on if the Borrower stops making payments and cannot reasonably validate a genuine apprehension of having to make duplicate payments.

So if you are a Virginia Borrower facing foreclosure, please do not rely on the Lender’s loss of your original Note as a permanent fix for your problem.   You should meet with a competent attorney and learn all of your defenses and rights and work together for a viable strategy to avoid foreclosure.

Many mortgages are sold or the servicing of the loan is transferred.   Paper can easily be lost.    In most states, this will not be a “live in the house for the rest of your life for free” card!   You can still find lawyers and non-lawyer “know-it-alls” who tell you what you hope to hear about Lost Notes, but the case below should thin out the lawyers who are still willing to tell you they can help you keep your house simply because the Note is lost.

William B. Butler of the Butler Liberty Law, LLC was ordered to pay $75,000, plus an undetermined amount for legal costs by  U.S. District Judge Ann D. Montgomery  for continuing to file and litigate “show-me-the-note” lawsuits.


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