Three Words to Stop Foreclosure?

An interesting strategy is making the rounds affecting homeowners who are in the process of having their home foreclosed on. Apparently using just three words can make a huge difference. No, the three words are not “this really sucks”. They are “produce the note”. Some homeowners have apparently had success stalling the foreclosure process, or even having the foreclosure stopped by demanding that the lender produce the original note that is the basis of the action.

The reason is simple. Most loans originated in the past few years have been bundled into securities, and sold (sometimes multiple times). Often it is a bureaucratic nightmare to try to locate the original promissory note the borrower signed. Banks are having a difficult enough time trying to cope with their existing foreclosures, and how to best spend their bailout money (an executive retreat in Aruba or purchase a bank in South America?), so what seems like a rather simple request can cause some banks to default into an endless search… kind of like explorer on my vista computer that spins around in circles every other time I try to use it.

We’ll see if this strategy continues to work. One could certainly argue that we need to avoid further damaging the banking system, despite their missteps.