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A home could be saved with three words: "produce the note." Facing foreclosure, owners Isabel and Richard Caporale are using a novel legal strategy to hang on to their home. The couple went to federal court and basically said just three words.
"They claim they have it, but I have no proof that they have this note, and you would think by now it's been almost three months," says attorney Marc Voisenat.
The "they" Voisenat is referring to is the loan servicing company and "the note" is the legal document proving money is owed. Without it, the strategy goes, money can't be collected and there can be no foreclosure. On Thursday, a federal judge agreed stopping the foreclosure in its tracks and for now, the Caporales can stay in their home.
"It's wonderful because I'm almost positive the next time we come back to court the house will be ours," says Isabel Caporale.
Thousands could use this strategy and it all comes down to sloppy paperwork. Mortgages are chopped up, bundled and resold around the world as complicated financial vehicles. Often the paperwork doesn't follow the loan and if there's no paperwork and no proof, the foreclosure is a no-go.
"We've never seen a company produce the original note yet," says Attorney Chris Hoyer.
Hoyer set up a website offering consumers advice and paperwork to pursue a "produce the note" strategy. In Florida "produce the note" is gaining momentum as a safety net for homeowners.
"The note has been sold so many times and they have become so sloppy with their paperwork. It could be on a dumpster somewhere for all I know," says Florida homeowner Jacci O'Brien.
Voisenat says nobody has been able to find the Caporales' note either.
"My clients are living there and can continue to live there until there's an actual foreclosure, but there won't be a foreclosure until the bank shows the court that they have the original note," says Voisenat.
He says the couple may be the first in California to use this strategy, but it's doubtful they'll be the last.
"I got lot of hope for the future that I didn't have before, but I do now," says Isabel Caporale.
The judge gave Saxon Mortgage Services one more chance to find the Caporales' promissory note. The deadline is August 31st. Of course, 7 On Your Side will be keeping track and report back.
Links:
Produce The Note "How-To" informaiton
Fight Foreclosure: Make 'Em Produce the Note
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