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What Do You Owe and to Whom Do You Owe It?

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By George W. Mantor

RISMEDIA, June 8, 2010—“Produce the Note” foreclosure defense strategies have given some people hope, albeit false in many cases, in defending their homes against unlawful foreclosures.

Note that in 30 states there is no judicial review of the foreclosure documentation and no opportunity to raise the issue of standing unless the homeowner sues the foreclosing entity. Few people have the resources to wage a lengthy battle against the best attorneys tax payer’s money can buy.

And, in that handful of cases in California, one of the nonjudicial states, where the homeowners have fought back, courts have been dismissing those lawsuits ruling that the nonjudicial foreclosure statutes, the infamous 2924, occupy the field and are exclusive as long as they are complied with.

But, because there is no review, foreclosing entities routinely violate those requirements without any fear of being challenged. Time and time again, we find that the foreclosing entities do not even bother to notify the homeowner until the foreclosure has already taken place.

And then, it is almost too late. As a last-ditch effort, the homeowner litigates to stop the issuance of an unlawful detainer and ultimate eviction.

At this point, the court will not entertain any objections as to standing or predatory lending or other issues. Judges simply cite 2924 and order the eviction.

These courts view the statutes that regulate nonjudicial foreclosures as all inclusive of all the requirements and remedies in foreclosure proceedings.

Indeed, California Civil Code sections 2924 through 2924k provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust.

Thus, in the case where a notice of default is recorded and a lawsuit then filed in response to stop the foreclosure, based upon the objection that the foreclosing party does not possess the underlying note, all too often the Court will simply dismiss the case and claim “2924 has no requirement to produce the note.”

The lynchpin of that legal theory is that the borrower agreed to an obligation, defaulted, the remedy is foreclosure, and that is the law. The note isn’t needed.

That is a dead end. The note is not the end game. They may even have the note with all the proper endorsements and a clear and demonstrable chain of title, they may not. If they have it, they may not produce it, even under penalty of sanctions.

Even if they produce it, they still have to deal with your predatory lending claims, and for that, a full accounting of all moneys paid in connection with the loan, including any insurance or TARP funds should be produced in discovery. The full accounting would reveal evidence of predatory lending or servicing for which penalties can be substantial.

We aren’t looking for the note; we are looking for the creditor. The person to whom the obligation, if there is one, is actually owed and the only party who would have standing to bring the foreclosure or to appear in court to answer questions regarding TILA, RESPA, HOEPA, and or a host of other provable allegations that show either origination fraud, servicing fraud, or both.

Your suit needs to lead off with something more substantial than a confusing paper trail attempting to show that they

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