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The bank that I have been making payments to, has lost or destroyed the promissory note.If they can't clarify, then what next?

Sarasota, FL |

My house is in foreclosure court, however, due to the fact that the bank does not know who has the promissory note, how can they proceed?

Attorney Answers 5


  1. The exact answer will depend on the Florida laws addressing foreclosure and what the lender must provide as proof of the debt. Generally speaking however, many states hold that if the lender cannot produce the mortgage and note evidencing the indebtedness, there is no ability to prove they hold the proper interest in the property upon which to foreclose. Equally important, some courts are now requiring lenders to produce evidence as to how they took posession of that indebtedness. You situation is very interesting and may be open to a dismissal motion based on the lender's inability to properly prove their interest. I suggest speaking with a local foreclosure attorney about your rights and the lender's requirements to substantiate its claim in court. Good luck to you.

    Disclaimer: The above response is not intended to create, nor does it create, either an attorney-client relationship or an ongoing duty to respond to questions. It is intended to be solely the educated opinion of the author and should not be relied upon as legal advice. The response given is based upon the limited facts provided by the inquiring person and additional or differing facts might change the response. Attorney is licensed to practice law only in the states of Illinois and Michigan. Responses are answers to general legal questions and the inquiring party should consult a local attorney for specific answers and advice.


  2. The Florida Statute which governs the bank's burden of proof in cases of lost or destroyed promissory notes is 673.3091, which provides as follows:

    Enforcement of lost, destroyed, or stolen instrument.--

    (1) A person not in possession of an instrument is entitled to enforce the instrument if:

    (a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

    (b) The loss of possession was not the result of a transfer by the person or a lawful seizure; and

    (c) The person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

    (2) A person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, s. 673.3081 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

    From my experience the courts have been somewhat liberal in permitting lost notes to be reestablished, once the bank provides testimony to satisfy the elements of 673.3091. Verified testimony in opposition should be obtained to rebut the bank's allegations. One useful strategy may be to depose the bank's records custodian or the person with the most knowledge of how the note was lost or destroyed.


  3. There are two ways that mortgage foreclosure companies can, and do, proceed forward with a mortgage foreclosure complaint even though they have "lost" the promissory note.

    First, Florida Statutes provide for the re-establishment of the lost note. So, if the lender can produce a copy of the note, the terms of the note, and produce credible (key) evidence as to the chain of custody of the note, who was in possession when the note was lost, etc., they can try to re-establish the note under Florida law. If uncontested, they will be successful. If contested, some judges will not grant them a judgment if their case file is in shambles. Talk to an attorney who is experienced in these matters. www.FloridaForeclosureDefense.com

    Second, many times after initially pleading a lost note, the lender will miraculously find the note by the time the summary judgment hearing rolls around. Truth be told, many times, these notes are sold off in mortgage backed securities and temporarily misplaced. Once found, the mortgage company or its trustee, will then drop the lost note count and proceed forward under the breach of contract claim and mortgage foreclosure count. Technically, this is an improper way to proceed and leads to a judgment inconsistent with the pleadings. The mortgage company should be forced to amend its complaint before moving forward.

    In the end, there are many possible defenses -- both substantive and procedural -- that a qualified FL attorney can assert to try and buy you time and increase your leverage to barter a better deal with the lender (i.e., short sale, waiver of deficiency, loan modification, threat of bankruptcy, etc.) Good luck.

    DISCLAIMER: This answer in no way attempts to establish an attorney-client relationship. If you have any further questions or would like assistnce, please feel free to contact our office and set a free initial consultation. We have a Sarastoa and St. Petersburg office for your convenience. www.FloridaBKLawyer.com www.ConsumerRightsGroup.com


  4. There are two ways that mortgage foreclosure companies can, and do, proceed forward with a mortgage foreclosure complaint even though they have "lost" the promissory note.

    First, Florida Statutes provide for the re-establishment of the lost note. So, if the lender can produce a copy of the note, the terms of the note, and produce credible (key) evidence as to the chain of custody of the note, who was in possession when the note was lost, etc., they can try to re-establish the note under Florida law. If uncontested, they will be successful. If contested, some judges will not grant them a judgment if their case file is in shambles. Talk to an attorney who is experienced in these matters. www.FloridaForeclosureDefense.com

    Second, many times after initially pleading a lost note, the lender will miraculously find the note by the time the summary judgment hearing rolls around. Truth be told, many times, these notes are sold off in mortgage backed securities and temporarily misplaced. Once found, the mortgage company or its trustee, will then drop the lost note count and proceed forward under the breach of contract claim and mortgage foreclosure count. Technically, this is an improper way to proceed and leads to a judgment inconsistent with the pleadings. The mortgage company should be forced to amend its complaint before moving forward.

    In the end, there are many possible defenses -- both substantive and procedural -- that a qualified FL attorney can assert to try and buy you time and increase your leverage to barter a better deal with the lender (i.e., short sale, waiver of deficiency, loan modification, threat of bankruptcy, etc.) Good luck.

    DISCLAIMER: This answer in no way attempts to establish an attorney-client relationship. If you have any further questions or would like assistnce, please feel free to contact our office and set a free initial consultation. We have a Sarastoa and St. Petersburg office for your convenience. www.FloridaBKLawyer.com www.ConsumerRightsGroup.com


  5. The answer to this depends completely on what you do about it. Many foreclosure cases make this claim, yet sail through anyway. Unless the right things are done about this issue, and unless it is a real issue (the plaintiff law firms frequently lie about this merely to get their case filed before they bother to get the file), it will not change the outcome.

    If you care how this turns out, before you do ANYTHING, I urge you to find an experienced attorney who is knowledgable about foreclosure defense and bankruptcy to help you. There is no way to be more specific without much more information. That is why an attorney who really understands how this works needs to hear all the details. Properly defending these cases is not something that even most attorneys know how to do. We have clients who are themselves attorneys, yet have come to us for help because they understand this, and realize that in order to have a chance against the "big guys" they need really qualified people to help them.

    While you may think you can't afford competent counsel, you can't afford NOT to have proper advice and assistance.

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