If a mortgage company does not havemy promissory note, is my home now mine free and clear?

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If a mortgage company does not havemy promissory note, is my home now mine free and clear?

I have applied for a modification, a refinance (without any success), seen a HUD counselor (who helped me write a letter requesting proof that the mortgage company has possession of the promissory note). I am about to seek legal counsel.

Asked on March 8, 2011 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You are asking about a hotly contested and furiously involving area of the law. There are some courts that are taking the tack that (generally) the inability to provide the promissory note prevents foreclosure, on the grounds that the mortgage is to enforce the note; the note is a negotiable instrument; and possession is required to enforce negotiable instruments.

Other courts however will generally allow enforcement, if the creditor can show bhy some other means that it should be entitled to enforce--for example, if bank 2 bought the loan from bank 1 for good consideration, the court may hold it would not be fair to let bank 2, which paid for assignment of the note, to enforce it.

Complicating the matter is that how the note was lost or unavailable matters, too--for example, there are provisions in the law to allow enforcement of lost, stolen, or destroyed notes under the appropriate circumstances.

All that can be said is: many people are making essentially the argument you are making, some seem to be succeeding, and in any event, the argument is getting a serious hearing in most courts. It would seem to be worthwhile to consult with a lawyer and consider pursuing this tack. Good luck.


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