Broken Promises:
Promissory Note Fraud

A promissory note is a form of debt – similar to a loan or an IOU – that a company may issue to raise money. Typically, an investor agrees to loan money to the company for a set period of time. In exchange, the company promises to pay the investor a fixed return on his or her investment, typically principal plus annual interest.

While promissory notes can be legitimate investments, those that are marketed broadly to individual investors often turn out to be scams. The SEC and state securities regulators across the nation have joined forces to combat the fraudulent sale of promissory notes to investors. But we can’t stop every fraud.

That’s why you should ask tough questions – and demand answers – before you consider investing in a promissory note. Be sure you understand how they work and what risks they pose. These tips will explain how promissory note fraud can occur and will help you to spot the scams.

Anatomy of a Promissory Note Fraud

Fraudsters across the nation have recently begun to use promissory notes as vehicles to defraud investors out of hundreds of millions of dollars. Most promissory note scams follow predictable, fraudulent fact patterns:

  • The fraudsters – who may or may not be affiliated with the company – persuade independent life insurance agents to sell promissory notes, luring them with lucrative commissions of up to twenty or even thirty percent. These agents often do not have a license to sell securities. And in selling the notes, they frequently rely solely on the information the company gives them – which later proves to be false or misleading.
  • Investors purchase the promissory notes, enticed by the promise of a high, fixed-rate return – up to fifteen or twenty percent – with a very low level of risk. The promissory notes may appear all the more attractive because the seller falsely claims that they’re “guaranteed” or insured. And few investors ask tough questions about these investments because they know and trust the sellers, insurance agents with whom they’ve done business in the past.
  • The fraudsters use a portion of the money they collect from investors to pay the sellers their commissions. But they typically abscond with the rest, squandering it on personal expenses or high-flying life styles.
  • They may also use some of the proceeds to support an elaborate “Ponzi” scheme in which money coming in from the sale of new notes pays the interest on older notes. Some fraudsters try to avoid repaying investors’ principal by convincing investors to “roll-over” their promissory notes upon maturity. These investors may, for at least a time, continue to receive interest payments – but they rarely get their principal back.

Promissory note scams often target the elderly, bilking them of their retirement savings at a time when they can least afford to lose it. But no one is immune. Fraudsters rarely discriminate when it comes to separating investors from their money. And most investors don’t even realize their investment dollars are at risk until it’s far too late.

Tips To Avoid Promissory Note Scams

Here’s how you can avoid the costly mistake of investing in a sham promissory note:

  • Bear in mind that legitimate corporate promissory notes are not usually sold to the general public. Instead, they tend to be sold privately to sophisticated buyers who do their own “due diligence” or research on the company. If someone calls you up or knocks on your door trying to sell you a promissory note, chances are you’re dealing with a scam.
  • Find out whether the investment is registered with the SEC or your state securities regulator – or whether it’s exempt from registration. Most legitimate promissory notes can easily be verified by checking the SEC’s EDGAR database or by calling your state securities regulator, which you can find at the website of the North American Securities Administrators Association. If the promissory note is not registered, you’ll have to do your own thorough investigation to confirm whether the company has the ability to pay its debt.
  • Be skeptical if the seller tells you that the promissory note is not a security. The types of promissory notes involved in promissory note scams usually are securities and must be registered with either the SEC or your state securities regulator – or they must meet an exemption.
  • Make sure the seller is properly licensed. Insurance agents can’t sell securities – including promissory notes – without a securities license. Call your state securities regulator, and ask whether the person or firm is licensed to sell securities in your state and whether they have a record of complaints or fraud. You can also get this information by calling FINRA’s public disclosure hotline at (800) 289-9999 or by visiting their website.
  • Beware of promises of “risk free” returns. These claims are usually the bait con artists use to lure their victims. Always remember that if it sounds too good to be true, it probably is.
  • Watch out for promissory notes that are supposedly “insured” or “guaranteed,” especially if a foreign insurance company is involved. Be sure to call your state insurance commissioner to find out whether the foreign insurance company can legally do business in the United States.
  • Compare the rate of return on the promissory note with current market rates for similar fixed-rate investments, long-term Treasury bonds, or FDIC-insured certificates of deposit. If the seller promises an above-market rate on a short-term note, proceed with caution.

What To Do If You Run into Trouble

If you believe you’ve invested in a promissory note scam, act promptly. By law, you only have a limited time to take legal action.

Contact the SEC’s Office of Investor Education and Advocacy. You can send us your complaint by using our online complaint form. Or you can reach us as follows:

U.S. Securities & Exchange Commission
Office of Investor Education and Advocacy
100 F Street, N.E.
Washington, D.C. 20549-0213
Fax: (202) 772-9295

You should also contact your state securities regulator and, if an insurance agent sold you the promissory note, your state insurance commissioner.

Learn More About Promissory Notes

For more information, visit the website of FINRA, where you can read an alert on Promissory Notes Can Be Less Than Promised.

7 Responses

  1. I have owned (with my husband) and lived in our home at 4502 Wood Street, Erie, PA 16509 since we purchased it in January 1973 and we have raised our 8 children in this home. We had a 30 year fixed rate 7% mortgage with a local bank and were never late paying this mortgage. Prior to paying this mortgage off we refinanced our home in order to build an addition when my 83 year old mother came to live with us. After falling and breaking her hip she could no longer live on her own. She was upset about our refinancing and wanted to do all that she could to help us pay off the new mortgage. She insisted we get a 10 year mortgage and she was a great help paying it. Shortly after she died we asked our local credit union who held the mortgage to help us refinance with a 30 year fixed rate. We were shocked when they turned us down because we had never been a day late paying our mortgage and our credit was perfect. The reason they gave us was that our debt ratio was too high to qualify. I told them there was no way we could continue to pay without my mothers income, but promised them if we financed we would never be late. They did not care. We continued to pay our mortgage on time, but had to skip paying other bills. The bank manager told me to contact GECAC about a program in PA that helped you pay your mortgage with a short term loan. I contacted them and was told I didn’t qualify because our payments had never been late. The GECAC representative advised us to skip the next 3 mortgage payments and to contact her when we received a notice of foreclosure. I called the cu manager and explained what I had been told and how nervous it made me since I had never paid a mortgage late. He said I would have to follow her advice to get help from PA so we skipped the next three mortgage payments and tried to catch up on our other bills. With the threat of foreclosure in hand, we went back to GECAC only to find a new person in charge of the program. She took a look at our paperwork and declared we were not eligible because we owned another property that was in Ohio. Prior to my mother’s death, we had purchased a very small house in Steubenville for $15,000 where our five youngest children went to school at Franciscan University because it was a lot cheaper than room and board. The previous gal at GECAC either missed that information or was not very well informed about the PA program. Needless to say, it was a lot more difficult to get another mortgage now that our credit was trashed.

    We weathered the new mortgage until 2002 when my husband lost his job. Trying to get a mortgage when your husband has no income and your credit is poor seemed impossible to me until I was contacted by mortgage brokers. I cannot tell you how slimy these guys were – not like dealing with your local bank or credit union. Each time I spoke to them the rate changed. After we made a decision to go with one of them our rate changed three times and the closing costs more than doubled, but we no longer had a choice. It was like having a gun to your head because the only other option is losing your home. The mortgage was for $114,500 at 13 ½ % and the closing costs were close to $10,000. The paper was sold numerous times. I could tell you nightmare stories about this mortgage, but won’t waste your time. The last company to hold the paper was Select Portfolio. I paid the mortgage each month and it was never a day late. We planned to refinance with a bank or our insurance company, USAA, where we have had our homeowner and auto insurance since 1965. Unfortunately, my husband’s new job was a straight commission job and his income was pretty low for the first few years so we were stuck with the mortgage from hell until 2006 when my husband made a lot more money and inherited the home he grew up in Emmaus, PA. After all of this good fortune, my husband of over 40 years quit his job, left town in September 2006 and for 9 months I had absolutely no idea where he was.

    When he finally turned up in 2007 at my son’s home in Hershey, PA I went and got him and took him home. He was emotionally fragile and very forgetful, but told me he was under the care of a good psychiatrist at the VA since late 2006 and had medications to help him. He assured me that finances were good, he was about to pay the mortgage off with money he received from the sale of house in Emmaus, and that he would continue to pay all of the bills as he had done while he was gone. I didn’t worry, but did ask him periodically if the mortgage was paid off. In early 2008 he told me it was paid. I had no reason not to believe him and in April 2008 when he turned 66 he began to receive his social security check. In July 2008 at age 62, I began to receive my social security check. I knew we could afford to pay our utilities and real estate taxes now that we had no mortgage payment. Near the end of 2009 I discovered a letter from North West Savings bank on his desk about a late mortgage payment. I was in shock when he confirmed that although he had paid off the 13 ½ % mortgage (for $126,760), he had taken out an even larger mortgage for $143,850 at 8.625 % in April of 2008 at North West Savings in Hershey. I was furious because he had done this behind my back and had been lying to me about our financial situation ever since he came home in 2007. He could not tell me what happened to all the money he made in 2006 or what happened to the $165,000 he received from the sale of the house he inherited. With no savings, no 401K and no income other than our $1878 and $691 social security checks and a $195 pension, I did not know what to do, but I took over the finances and put everything on Quicken. Since then I pay the mortgage, utilities, insurance and fill up the car once a month. There is no money for food or church or anything else. For the past 2 years our food comes from the food bank. We have no credit cards and therefore no credit card debt. Thank God we have no car payments and we are praying our 12 year old car doesn’t break down because there is no money to fix it.

    Did I mention we also had no money to pay our real estate taxes for 2009, 2010 or 2011? Our delinquent 2009 property taxes with interest and penalties are $6,428 if paid by July 31 and without this payment, our home will be sold at a tax sale. I would love to pay off the NW loan that has interest compounded daily and pay the $18,0000 we owe in back taxes, but fear no bank will talk to us about refinancing with a 30 year fixed low rate mortgage considering our income and credit. I have not checked it, but it can’t be good. I figured the only bank that might be willing to help us is NW because it is not in their best interest if our house is sold at auction. They also know that since I took over paying the bills at the end of 2009, our payments have never been late. I got out the copies of the promissory note before I called the Hershey Branch and after discussing refinancing, I asked how they could have approved this current loan without my knowledge, consent or my signature. I did not see my husband’s signature either, but realized I was looking at copies of copies. He was listed as the sole borrower, but since my name is on the deed, I could not figure out how the loan could be approved without my signature on the “Third Party Agreement”. My name was typed in, but misspelled and there was no signature. The same situation on the “Notice of Right to Cancel” pages. I asked the loan officer at the Hershey Branch if he had copies of the original loan documents that he could show me. I told him that I wanted to see if they had really processed a loan without my signature or if there was any signature. I told him that if there was a signature, it was a forgery since I never knew about the loan and certainly would not have signed it. I also wondered who would have notarized a forged signature. He told me that he could not pull up the documents on his computer and would have to order copies from their main office in Warren, PA. Each time I mentioned the original loan documents, he changed the subject to how happy they would be to help us with a refinance in spite of our limited income and likely credit problems. Shortly after talking to this loan officer, Jeremy Kline, at the Hershey Branch, the loan officer who originally handled this loan, Timothy Rhoades, now at the Lancaster Branch, called me. I asked him if he could remember anything about this loan. Did he remember meeting my husband? Did he wonder why he never met me? Was he aware that my husband did not want me to find out about this loan? Did he know why I had not signed the papers? Did he sign the papers? If my husband gave him papers with my signature on it why weren’t they notarized or if notarized, who was the notary? Mr. Rhoades had amnesia. He could remember nothing. He would have to wait until the copies of the original loan documents came from Warren to answer my questions.

    I called my son, Sean, and asked him what he knew about the loan. He said he had introduced dad to Tim and that Tim was aware that dad did not want me to know about the loan. Dad told Tim that I was in a wheelchair and could not come from Erie. It is true that I am permanently in a wheelchair, but I could have gone to our local notary or to one of our local Northwest branches and had my signature notarized by them. I didn’t because I knew nothing about the loan and had I known, I would not have signed it.

    I then called a very nice lawyer in Erie that only does Real Estate and has handled some real estate transactions for my children. He has an excellent reputation and is a friend of my youngest daughter. He immediately pulled the loan documents up on his computer. I couldn’t figure out how he could do that when they couldn’t pull them up at Northwest. He assured me they could, but did they did not want me to see them. He said it looked like my husband had probably signed my name and both signatures were notarized by the same notary at the Northwest Savings Bank in Hershey. I couldn’t figure out how she could do that without my being there and without so much as seeing my drivers license. His advised me to call Northwest and tell them that what they had done was illegal, the promissory note was not valid and they would not be able to collect on it. He said if they did not agree to cancel the loan I should tell them that I would report what happened to the FDIC.

    I asked my husband where the closing took place. Was it in the attorneys office, the title company office or at Northwest? And how did Tim get the notary to notarize my signature? He didn’t remember much, but he said after his meeting with Tim in Hershey, Tim told him not to worry about anything. He would not have to come back to Hershey. Tim would send him the loan documents in Erie and my husband would just have to sign them and send them back. I asked if Tim wanted them notarized. My husband said he did not even mention a notary. He sent them to Tim with his signature and my forged signature and Tim had them notarized at the bank in Hershey. I asked him if Tim was aware that you didn’t want me to know about the loan and he said, “Of course!” To say that I am upset with my husband is an understatement!

    Is it possible that Northwest really cannot collect on this promissory note? Is my husband liable since he did sign the note even though he did not sign it in front of a notary?

  2. frankielee,

    Repurchase demands would require “Depositor” – who purchased loans from originator – to repurchase the “bad loans” (most originators are gone). Problem is the “Depositor” is a subsidiary of Wall Street bank – who has likely already sold collection rights to the “bad” loan to a third party. Thus, if repurchase demand is successful – this would only be a monetary transfer sum – and not transfer of the collection rights to “bad” loan.

  3. Karl over at wrote a piece recently where he states that if in fact the banks are forced into buying back the MBS such as the $20B B of A article, they would then be able to legally foreclose, as they’d now be the true holder of the note. Full article here:

    Any thoughts?

  4. Ally Gets Ohio, Colorado, North Carolina Queries on Evictions
    By Danielle Kucera and Margaret Cronin Fisk – Sep 28, 2010 5:23 PM ET

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    Richard Cordray, Ohio attorney general

    Richard Cordray, Ohio attorney general. Source: Ohio Attorney General Office via Bloomberg
    U.S. Home Seizures at 3rd Record in Five Months Sept. 17

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    Sept. 16 (Bloomberg) — U.S. home seizures reached a record for the third time in five months in August as lenders completed the foreclosure process for thousands of delinquent owners, according to RealtyTrac Inc. Bloomberg’s Su Keenan reports. (Source: Bloomberg)

    Ally Financial Inc., the lender that stopped evictions in 23 states, faces new queries from Ohio, Colorado and North Carolina about whether its foreclosure process is legal.

    Ohio Attorney General Richard Cordray asked state judges in a letter today to do a special review of all foreclosures involving Ally’s GMAC Mortgage unit and urged them “to exercise caution when approving any foreclosure orders involving GMAC.” Colorado Attorney General John W. Suthers asked Ally yesterday to extend the freeze on evictions to his state, and his counterpart in North Carolina is asking for a meeting with GMAC.

    Mortgage firms have drawn fire from lawyers and homeowners about methods used to streamline foreclosures as U.S. evictions hit record levels. GMAC Mortgage notified agents and brokers on Sept. 17 that it had suspended evictions. Ally, the Detroit- based parent company of GMAC, said it found a “technical” defect in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true.

    Attorneys general in at least five states including Texas and Florida are investigating GMAC’s practices and California has told the company to prove its foreclosures are legal or halt them.

    North Carolina sent a letter yesterday telling Ally that “use of unverified affidavits to obtain judicial relief could constitute a fraud upon the court.” The letter was sent by North Carolina Assistant Attorney General Philip Lehman to Ally General Counsel William B. Solomon Jr.

    Ally spokeswoman Gina Proia wasn’t immediately available for comment.

    To contact the reporters on this story: Danielle Kucera in New York at Margaret Cronin Fisk in Detroit at;

    To contact the editor responsible for this story: Rick Green in New York at

  5. BofA May Owe $20 Billion in Mortgage Buybacks, Insurers Say
    By Hugh Son – Sep 14, 2010 12:00 AM ET

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    Bank of America CEO Brian T. Moynihan

    Bank of America Chief Executive Officer Brian T. Moynihan. Photographer: Jonathan Fickies/Bloomberg
    Top Business Stories

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    Sept. 14 (Bloomberg) — Bloomberg’s Deirdre Bolton reports on the latest breaking news and top stories in today’s Business Briefs. (Source: Bloomberg)

    Bank of America Corp., the biggest U.S. lender by assets, should repurchase as much as $20 billion in home loans that were based on wrong or missing information, said a trade group for bond insurers.

    More than half of the soured home-equity credit lines and residential mortgages created from 2005 through 2007 that insurers examined should be bought back, the Association of Financial Guaranty Insurers said in a Sept. 2 letter to Bank of America Chief Executive Officer Brian T. Moynihan. Ambac Financial Group Inc. and Assured Guaranty Ltd. are members, and the group said repurchases may total $10 billion to $20 billion.

    Banks are dealing with demands for repurchases from buyers and insurers of mortgage securities who say that the loans were created with false, misleading or missing data. Repurchases have already cost the four biggest U.S. lenders $9.8 billion, according to Credit Suisse Group AG. Bank of America has said it faces $11.1 billion of unresolved claims, which it reviews on a “loan-by-loan” basis.

    “This defensive posture will soon prove ineffective in shielding Bank of America from the financial, accounting, legal and other implications of its massive obligations to our industry members,” Teresa Casey, executive director of AFGI, said in the letter.

    Bank of America declined to comment on the letter, said Jerry Dubrowski, a spokesman for the Charlotte, North Carolina- based firm. The lender hasn’t yet responded to the insurer group, Casey said yesterday in a telephone interview.

    Manageable Demands

    Moynihan told an investor conference in San Francisco yesterday that buyback demands are manageable, and that his goal is to resolve legal issues as quickly as possible.

    Bank of America acquired Countrywide Financial Corp., once the biggest U.S. mortgage lender, in July 2008 after the target faced bankruptcy amid payment defaults and foreclosures. Insurers have also requested files on about $9.8 billion of loans that hadn’t triggered buyback claims as of June 30, according to Bank of America’s quarterly report.

    The New York Insurance Department was aware of the AFGI letter and is reviewing the issue because buybacks “will materially impact the financial condition of the insurers we regulate,” Michael Moriarty, New York Insurance Department deputy superintendent, said in an e-mail.

    Insurers are negotiating repurchases and suing firms including Bank of America as they seek to recover from losses on mortgage-security guarantees. Bank of America has described the disputes over mortgage repurchases as a battle, while Dominic Frederico, CEO of Assured Guaranty, said last month that settlement talks with BofA were “like Chinese water torture.”


    “We’ve been pushing for regulatory intervention both in the insurance level and in the banking level,” Frederico said.

    AFGI is urging Bank of America to report the “full magnitude of its liability” to the bond insurers in filings, according to the letter, which was also sent to the bank’s auditor, PricewaterhouseCoopers LLP. The bank’s year-end audit may “put increasing pressure on accounting and disclosure obligations surrounding this liability,” Casey wrote.

    Fannie Mae and Freddie Mac are among firms seeking to force banks to take back defective mortgages, especially those written during the peak of the housing boom, after defaults helped push the two federally backed firms and some insurers to the brink of collapse.

    Compass Point Research and Trading LLC predicted that 11 U.S. lenders could incur losses ranging from $55.3 billion to $179.2 billion. The estimate was made by Chris Gamaitoni, a former senior financial analyst at Fannie Mae.

    Invalid Claims

    Banks manage to repel about half of the buyback claims they receive by showing they’re invalid, according to Moshe Orenbuch, the Credit Suisse analyst who tabulated the bank’s losses from 2008 through the second quarter of this year. The banks probably have adequate reserves, Orenbuch said in his report last month.

    It’s unlikely that “a valid defect exists for every loan repurchase request,” Bank of America said in its second-quarter regulatory filing. Even if claims are valid, losses probably would be less than the full value of the loans because the underlying real estate acts as collateral, the filing said.

    “The resolution mechanism for disputes with the private insurers is a lot less developed” than with Fannie Mae and Freddie Mac, said Chris Kotowski, an analyst at Oppenheimer & Co. “There is a team of highly paid lawyers on all ends of this correspondence doing the kind of jousting that they do, hoping to draw the opponent into some legal faux pas.”

    To contact the reporter on this story: Hugh Son in New York at

  6. Banks Foreclose First, Ask Any Questions Later: Ann Woolner
    By Ann Woolner – Sep 28, 2010 9:00 PM ET

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    Bloomberg Opinion

    Ann Woolner
    U.S. Home Seizures at 3rd Record in Five Months Sept. 17

    Play Video

    Sept. 16 (Bloomberg) — U.S. home seizures reached a record for the third time in five months in August as lenders completed the foreclosure process for thousands of delinquent owners, according to RealtyTrac Inc. Bloomberg’s Su Keenan reports. (Source: Bloomberg)

    There was a time, not long ago, when having a home of your own signaled stability. It was a stake in a community, a place for individuals to come into their own or for families to grow. It was a solemn obligation to a financial institution, a statement of the bank’s faith in you, an investment for old age.

    So much for that. These days, millions of houses across the country sit empty or shelter owners who can’t or won’t make mortgage payments. The vacancies give lie to the notion of home ownership as a road to stability.

    As dismal as the housing market is, at least we could cling to the idea that the nation was slowly climbing out of the mortgage mess. However painful foreclosure and heartbreaking evictions, the country was working its way toward still-distant normalcy.

    This month hope for a stabilized housing market took a hit, as Ally Financial Inc.’s GMAC Mortgage unit halted evictions in 23 states. Attorneys general in two more states also are demanding moratoria.

    The culprit is sloppy, possibly fraudulent, paperwork by at least one manager at the division. And it looks like he was doing what lots of other foreclosure processors were doing, too.

    We’ve seen this culprit before. Sloppy research and sometimes fraudulent paperwork by lenders, loan packagers, credit raters and insurers of mortgage-backed securities kicked off the mortgage disaster in the first place.

    The only difference is that this time it’s occurring at the rear end of the business, foreclosures.

    Did anybody working at mortgage lenders learn anything over the past two years? And shouldn’t banks be careful about taking away someone’s home?

    No Checks

    GMAC middle manager Jeffrey Stephan said in a deposition that he signed 10,000 foreclosure packages a month. To accomplish that, he had to give up something. What he omitted was checking to see whether the named owner was really in default and whether the listed mortgage holder in fact still held the mortgage.

    In other words, he had no time to check the facts contained in the papers whose accuracy he was guaranteeing. Nor did he bother to always have a notary present when he signed, as required.

    Likewise, a JPMorgan Chase & Co. executive said in a deposition last May that she hadn’t personally verified information on the thousands of affidavits and other documents she signed so that her bank could foreclose on houses.

    Review Process

    Beth Ann Cottrell, an operation supervisor at the company’s Chase Home Finance unit, testified that she and seven other managers signed a total of about 18,000 documents a month, according to a transcript.

    “My review is more or less signing the document unless it’s questionable,” she said.

    Lawyers for homeowners say it was her job to do the questioning, and to do it before signing. Why else was she reviewing the documents — for typos?

    Between the two of them, JPMorgan and Ally service a huge chunk of the country’s home mortgages, $1.35 trillion for JPMorgan and more than $349 billion for Ally, according to newsletter Inside Mortgage Finance.

    These firms were clearly overwhelmed by the volume of foreclosures, but there’s a reason people like Stephan and Cottrell were called on to sign the documents, and it isn’t to serve as rubber stamps.

    Ally calls Stephan’s time-saving methods a mere “technical” error and says it’s working to correct the “potential” issue. It may have to redo some foreclosures.

    Speculative Conclusions

    Surely Ally was aware of how quickly those stacks of foreclosure packages were moving. What did it think was happening?

    If for no other reason, it should have been more careful because in 2006 GMAC was sanctioned by a judge in Duval County, Florida, for precisely the same conduct.

    It’s too early for Ally to call the problem only technical, a common practice with no serious consequences. No one can know that since no one was checking the accuracy of the documents.

    To say that few, if any, homeowners were wrongfully evicted is mere speculation. So is the idea that almost all owners of mortgages were accurately identified at foreclosure.

    Some consequences are already clear. Thanks to this little “potential” issue, even borrowers who have clearly defaulted get new grounds to try to fend off foreclosure.

    Lawyers for a homeowner in Palm Beach County, Florida, have asked a judge to cancel foreclosure proceedings for her because of Cottrell’s admission.

    Then there are people as yet untouched by foreclosure who occupy homes long after they stopped making mortgage payments. They could get more time living mortgage-free as servicers try to figure out who’s really in default and to which mortgage holder.

    Legal Consequences

    Slowing down the process will keep more people sheltered longer, and will reduce the dumping of homes into an already flooded housing market. That’s fine by me.

    But it also delays the day when the market will hit bottom and recovery begins.

    And technical or not, in some states the mortgage-servicing firm can get into serious legal trouble for cutting corners.

    “The use of unverified affidavits to obtain judicial relief could constitute a fraud upon the court,” North Carolina Assistant Attorney General Philip Lehman wrote Ally General Counsel William B. Solomon Jr. this week.

    No, home ownership isn’t what it used to be. And as long as those in the mortgage business keep up their slovenly habits, it won’t be.

    (Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.)

    To contact the writer of this column: Ann Woolner in Atlanta at

    To contact the editor responsible for this column: James Greiff at

  7. Should we all report our cases to the SEC?

    That would be grand.

    Most documents were destroyed and these lawyers are coming in with color copies and the lawyers on the defense were being so gullible..

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