MSNBC: Potential Foreclosure Tactic

MSNBC picked up an AP story on February 17th – New Foreclosure Defense:  Prove I Owe You, which is similar my 2007 post From The New York Times: “Foreclosures Hit A Snag For Lenders”.  The issue surrounds borrowers’ challenges to the evidence, or lack thereof, submitted by lenders in support of their residential foreclosure cases. 

In commercial suits, the documentation hurdle addressed in the MSNBC article should rarely be an issue, but there can be lessons learned from the story.  As mentioned in my post The Commercial Lender’s 8-Item Care Package For Its Foreclosure Attorney, all loan documents must be provided to counsel for submission to court:

   Loan documents.  Each and every piece of paper documenting the loan needs to be forwarded.  This would include all promissory notes, mortgages, security agreements, amendments, modifications, assignments, etc.  Not only will the law firm need these materials to analyze the case, but Indiana Trial Rule 9.2(A) requires written instruments, upon which a cause of action is based, to be filed as exhibits to the Complaint.

The MSNBC story seems to suggest that plaintiff/lenders need the original loan documents to proceed with foreclosure.  That’s not my experience, but the MSNBC piece doesn’t dig too deep into the legal technicalities or provide examples of the court filings being utilized by borrowers in these cases.  It’s my understanding that true and accurate copies of loan documents will suffice.  See, Indiana Evidence Rule 1003, which generally permits duplicate documents in lieu of originals.  Also, Trial Rule 9.2(A), noted above, points out when copies are allowed. 

If you’re familiar with the details of the strategies identified in the MSNBC article, please give me a call or email.  I’d be interested in learning about the techniques.  If I’m able to uncover more about the issue, I’ll supplement this post.  Thanks to my colleague Jamie Young for steering me to the story.