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Can a bank foreclose on a home without a genuine copy of the promissory note?

Des Plaines, IL |

The note is forged. What defense should be applied in answer... fraud? fraud upon the court? No standing to foreclose?

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Attorney answers 5

Posted

This is the most used, and least accepted defense that pro se defendants use.. I would not recommend using it unless the note truly was forged. If the note was forged, that should be an affirmative defense. Without passing judgment on your case, if the bank loaned you money and you signed the mortgage, your argument that the note is a forgery will not go very far.

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Asker

Posted

The note truly is forged; the signatures and initials and the rates on the note do not match the original.

Jason Lawrence Pyrz

Jason Lawrence Pyrz

Posted

The actual terms of the note differ from the note you signed? It sounds like there is a bit more going on here than you want to get into in a public forum. I would recommend finding an attorney to review your documents and go over your options.

Asker

Posted

Thanks. Is there an attorney you would recommend to consult?

Judy A. Goldstein

Judy A. Goldstein

Posted

Asker - I agree with Mr. Pyrz. Also, he knows his stuff. He is not really in your area but perhaps he can help you. Is it possible the original Note is missing? It would be odd if you were able to secure a mortgage without also signing a note. The original note should have been recorded along with the mortgage.

Asker

Posted

No, Ms. Goldstein, it is not missing. Where should the original note have been recorded, please clarify? The note does not get recorded at county recorder's office, only the mortgage does--at least that's what I see after reviewing hundreds. The title company may still have a hard copy of both. The note being used by the trustee to attempt to foreclose on my property is a forgery, what else can I say.

Judy A. Goldstein

Judy A. Goldstein

Posted

It would have been recorded in the recorder of deeds office in the county where the property is located.

Asker

Posted

Can you please cite the law in cook county the bank must record both the note and mortgage at the office of recorder of deeds?

Judy A. Goldstein

Judy A. Goldstein

Posted

Please seek the services of a lawyer.

Asker

Posted

I still have yet to find a note that has been recorded at the recorder of deeds. Mers is not involved. The recorded transfer of deed of trust by the receiver to the trustee is based on fraudulent documents. I get a different story from every lawyer. Not until I raise the obvious issues do they take it seriously, but then its to late. If I could only find the right lawyer that would do a better job I would hire them.

Jason Lawrence Pyrz

Jason Lawrence Pyrz

Posted

notes typically are NOT recorded, as they convey no interest in property. Please give me a call on Monday and we can get a little deeper into the specifics.

Judy A. Goldstein

Judy A. Goldstein

Posted

Thanks for clarifying. I was thinking of the mortgage.

Asker

Posted

lol Title conveys the rights of ownership of land parcel. The note is a promise to pay the bearer. The mortgage details out the specifics of the contract between parties. The circuitous logic here is: once the mortgage is paid, the promissory note is fulfilled, which gives the rights of clear title to the owner for the land.

Jason Lawrence Pyrz

Jason Lawrence Pyrz

Posted

No, you actually have it backwards. The main document is the note, not the mortgage. The mortgage is security for the note. Once the note is satisfied, the mortgage is released because the underlying obligation has been satisfied. The note does not need to be recorded because the purpose of recording a document is to give notice to others of any obligations affecting a parcel (mortgages, assignments, certain leases). The mortgage will typically set forth the terms of the note it secures, or at least the maximum principal indebtedness.

Asker

Posted

That's what I said. The note is a promise to pay the bearer of the note the amount on the note. So how is it "no interest in property" is conveyed when the main document is the note? The pay to the order of without recourse is the party receiving the note in interest.

Jason Lawrence Pyrz

Jason Lawrence Pyrz

Posted

No, you said once the mortgage is paid. That is wrong. A mortgage is not paid. A note does not transfer an interest in land because a note, by its terms, does not convey an interest in property. All a note is, is a promise to pay. The mortgage, as I said, is security for a note. Because the mortgage is the actual document that encumbers a parcel, it must be recorded to put other parties on notice and also to preserve the priority of the lender's security. Trust me, I've spent the last 7 years prosecuting commercial foreclosures.

Judy A. Goldstein

Judy A. Goldstein

Posted

Mr. Pyrz has spent a great deal of valuable time trying to clarify the asker's situation. Hopefully this discussion will be continued when the asker consults with him in person.

Asker

Posted

Then what am I suppose to pay if not the balance in the mortgage contract? Yes, mortgage is paid. Try to understand: "The circuitous logic here is: once the mortgage is paid, the promissory note is fulfilled, which gives the rights of clear title to the owner for the land." The security for the note is the right to land property which is a transfers thru conveyance of title, from one party to another party, giving title to the security of the new bearer of the note. The note, an IOU, represents the value of a security in terms of money. If a note is an IOU, then by definition it would have to represent an interest in property because the security is a fixed value for the price of land which is represented by the borrowers promise to pay within the note instrument. The title gives the note holder right to the security in-exchange for defaulting on the mortgage. Therefore, the mortgage is just a contract between parties.

Asker

Posted

I too have spent valuable time.

Jason Lawrence Pyrz

Jason Lawrence Pyrz

Posted

You asked a question. I answered it. I am sorry it was not the answer you wanted.

Asker

Posted

I am challenging it because your answer is wrong. I too want to get to the bottom of it.

Judy A. Goldstein

Judy A. Goldstein

Posted

Asker - with all due respect, you have exhausted this inquiry. Please speak to an attorney in person. Mr. Pyrz has gone out of his way to help you. This forum is for general Q&A. It is not designed for extensive legal discussion.

Judy A. Goldstein

Judy A. Goldstein

Posted

Go ahead and challenge. But please stop posting here. We are all volunteers. Mr Pyrz, like every other lawyer here, has a right refrain from responding to you.

Asker

Posted

Of course you have a right to refrain from responding to me; unlike obscene laws that benefit only those that make them as they go, I do not force you to conform to answering my questions. It is a discussion. I simply want the truth. Obviously, the legal justice system we have today on banking fraud is lax --benefiting parties that steal from the producers. People that work for money have been whipped out, while the people that sponge off the government, both at the top and bottom, collect. As I explained before, the attorneys I am finding don't care to represent according to the truth in the matter and constitutional and state law. Perhaps, there is some loss in translation.

Judy A. Goldstein

Judy A. Goldstein

Posted

You have made your own point. This forum is not designed for discussion.

Jason Lawrence Pyrz

Jason Lawrence Pyrz

Posted

In very simple terms, and for the last time, a note merely memorializes a loan and has nothing to do with property. A mortgage, at its essence, is simply a lien on your property. Neither a note nor a mortgage convey "title" to property. All a mortgage conveys is a "security interest" in property for the benefit of someone who loaned money. In Illinois, title passes by deed. The purpose of recording documents with the county is primarily to keep a record as to who has an interest in the real property located therein. Thus, a deed will be recorded because it shows who owns the property, and a mortgage will be recorded because it shows that the property is subject to a lien in the amount of the mortgage (which is based on the loan memorialized by the note). The reason mortgages and other liens are recorded is to put potential buyers, or subsequent lenders, on notice as to the liens that must be satisfied before they can gain clear title to the property, or to see if it makes sense to lend more money (ie, if the amount of the existing liens/mortgages exceeds the value of the home, a subsequent lender will likely not lend any more money). A note has no connection to the property aside from being the document which memorializes the debt secured by the mortgage. A note, by itself, conveys absolutely no interest in any property and, as such, does not need to be recorded. Feel free to believe that or not, but that is the way the law operates. If the current note holder is truly using a forged note to foreclose,it probably means they somehow lost or destroyed the original note. If that is true, they cannot sue on the note. As I said though, a judge will look very skeptically upon such an argument.

Jason Lawrence Pyrz

Jason Lawrence Pyrz

Posted

One more thing. Even though it is very typical to say "pay the mortgage" you are actually paying back the note. I assume this is where most people get confused because the mortgage is NOT the document that obligates you to pay back the loan. The NOTE is the document that obligates you to pay back the loan, therefore, you are paying back the NOTE. While the mortgage does have its own terms (for example, prohibitions on certain transfers, insurance requirements, etc), those are usually terms which are aimed at protecting the lender's security (your home) should the borrower (you) stop paying the note and they need to foreclose and take the home back in an attempt to cut their losses. Even though there is a ton of paperwork you have to sign whenever you take out a loan and get a mortgage, the transaction can be boiled down to these very simple steps. The bank loans you money to purchase a home. You sign a note which memorializes your obligation to repay the loan. You execute a mortgage which gives the bank the right to take the home should you not repay the loan pursuant to the terms of the note (or if you breach the terms of the mortgage). The lender then records the mortgage which secures his place in line. Assume the title on your property looks like this: 1) Deed from previous owner to you; 2) mortgage in favor of Bank granted by you in exchange for a loan to purchase the home; 3) second mortgage in favor of Bank B granted by you in exchange for a home equity line of credit; mechanics' lien by Contractor A for non payment of work done on home; judgment lien by credit card company for unpaid credit card bills. In that scenario you have the Deed which sets forth the ownership of the parcel, followed by a list of mortgages and liens, each recorded by a different creditor. In a foreclosure situation (any of those creditors can foreclose, incidentally), the order in which the mortgages/liens/etc were recorded is the order in which those mortgages/liens/etc will be paid off. If the home is sold at a sheriff's sale and there is not enough money to pay off the first creditor (Bank A), the other creditors will receive nothing. If there is a surplus after the sale and Bank A has taken its cut, then the money goes to Bank B, in second position, until its lien is paid off. In other words, the likelihood of the credit card company ever collecting anything is practically zero. THIS is why mortgage companies record mortgages. Because if they didn't, they would lose out on being paid off in the event of a foreclosure. It has nothing to do with safekeeping of records for the borrower's benefit.

Posted

Hire an attorney and explore filing an action in Federal Court.

Posted

I agree with my colleagues. There may be a number of ways for you to defend the lender's case against you and, perhaps, make a claim against the bank. It all depends on the facts, particularly the facts surrounding the forgery. You should consult a foreclosure defense attorney who has made claims against lenders as part of his/her foreclosure practice.

Asker

Posted

I do not disagree with you there are a number of ways to defend it.

Posted

As the other attorneys mentioned, this is a difficult defense to use. If, indeed you did not sign the note, you should explore this as a defense in your case. If you are looking to have the bank "show the note", to prove that they are the legal holders of the note, this is a defense that has very limited success. It is best for you to consult with an experienced foreclosure defense and bankruptcy attorney. The attorney can review all of your options and discuss the best defenses and actions to take in your situation.

Daniel J. Winter
BankruptcyLawChicago.com
312-789-9999
Offices in Chicago, Oak Lawn, Skokie, and Lake County, Illinois

Any advice given is general in nature and cannot be relied upon until the client retains the attorney after a full interview and review of the facts of the situation. No attorney-client relationship exists until a retainer agreement is signed and fees are paid.

Posted

I agree with the above answers. If you believe your have a valid defense, you certainly have the right to argue that in court. However, this must be done at the right time. Regrettably, should you fail to file the correct documents at the right time, your defenses are not likely to succeed. I suggest you hire an attorney asap. Good luck.

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