Foreclosure Foul-up: Tracking Down Those ‘Lost’ Mortgages

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

In hundreds of thousand of cases, the promissory note that proves a bank owns a borrower mortgage is now gone. Vanished. Some borrowers may walk away scot free. In other instances, banks may be forced to dramatically reduce what a borrower owes. Many foreclosures have already been halted by the courts or by the banks themselves. Still, bank officials say, even if they are missing the original promissory note, they have the paperwork to prove they own the mortgages.”

Editor’s Note: This is a good example that highlights the problem. The pretender lenders are by definition not the lenders but they wanted to be treated as lenders when it comes to foreclosing on property. If everything was on the up and up, there wouldn’t be any problem getting the chain of signatures required to do so, but they have some things to hide. The risk they face is that if they actually show the real documents, they might be sued for fraud, their bank charters might be revoked and the people involved might go to jail.

So they have created this convoluted system of “transfers” and “custodians” which combined with very official looking paperwork got several million foreclosures through the judicial system and through the non-judicial system like poop through a goose. Their problem is that SAYING doesn’t make it so and neither does wishing. They created some rabbit holes we went down looking for lost or destroyed documents when they were sitting in warehouses, but nobody wanted to admit that they existed, much less where they were.

The reason is that there were no actual transfers or deliveries of the loans and the loans themselves did not conform to the requirements of the securitization documents. But that is not the worst part. The worst is that the loans did not conform to the description that was used to “satisfy” the requirement that the pools be filled with real-life loans that were properly secured by real property whose value exceeded the value of the loan.

Thus we have “depositors” with whom nothing was legally deposited, “lenders” who loaned nothing, “bonds” that promised nothing, and “notes” that described an obligation that did not exist, all “secured” by an instrument referring to a transaction that never happened. In plain language, the transaction with the borrower was not the one described in the paperwork. THAT is a problem that cannot be corrected with a power of attorney, a limited signing officer, an endorsement in blank, or a trust that doesn’t exist.

Foreclosure Foul-up: Tracking Down Those ‘Lost’ Mortgages

By STEPHEN GANDEL Monday, Nov. 29, 2010

One of a million foreclosures this year.
Anthony Suau for TIME


Trevor Douglas, 54, may soon lose his Orlando house. Sure, Douglas hasn’t paid his mortgage in more than two years, which is what a Bank of America spokesperson tells me “is important to remember.” It is. Still, if it happens, I will feel partially responsible. I helped push Douglas closer to eviction.

Like many other home loans, Douglas’ IOU was bought and sold numerous times and finally packed into a bond. So when his foreclosure notice finally arrived, the entity trying to kick him out was one he had never heard of, something called GSAMP 2005-HE3. Worse, GSAMP said it had lost the original document — called a promissory note — to prove they owned his loan. Douglas hired a lawyer, who got the foreclosure put on hold. And that’s when I showed up. Much of the ire focused on the banks recently has been on their use of robo-signers — low-wage workers hired by banks to witness and sign hundreds of thousands of foreclosure notices without verifying that the grounds for the evictions were valid. On Thursday, a Federal Reserve official told lawmakers on a House Financial Service subcommittee that U.S. bank regulators are conducting a review of the banks’ foreclosure practices. In hundreds of thousand of cases, the promissory note that proves a bank owns a borrower mortgage is now gone. Vanished. Some borrowers may walk away scot free. In other instances, banks may be forced to dramatically reduce what a borrower owes. Many foreclosures have already been halted by the courts or by the banks themselves. Still, bank officials say, even if they are missing the original promissory note, they have the paperwork to prove they own the mortgages.

(See pictures of Americans in their homes.)

Just how bad is the problem? TIME dug into the mortgage of one troubled borrower. What we found suggests that many promissory notes are not lost. In an effort to rush homeowners to foreclosure, and hide damaging information, bankers’ have needlessly created a huge legal mess that once again questions the financial industry’s credibility and ethics. “They [banks] don’t comply with the law when they’re taking people’s homes,” says Michael Olenick, who owns Legalprise, a legal research firm.
Douglas’ mortgage broker got him a loan from subprime lender Fremont General, which before it went bankrupt in 2008, was based in Brea, California. In mid-2005, Fremont sold the loan to New York-based Goldman Sachs, which packaged it up with other loans and sold it off to investors. In June, Iris Owens, an official in the servicing arm of Bank of Amerca, signed an affidavit attesting that after a “diligent search,” Douglas’ original note could not be recovered. But even without the bank’s internal record it took me about four hours to find Douglas’ loan.

(See pictures of TIME’s Wall Street covers.)

Where is it? About five miles east of downtown Minneapolis, in a warehouse owned by Wells Fargo.

A simple search of public documents on the Securities and Exchange Commissions website was able to produce the address and telephone number of the building it was in. Bank of America now concedes it made a mistake. Instead of calling Wells Fargo, an associate in Bank of America’s mortgage-servicing division requested Douglas’ note from Deutsche Bank, which runs the mortgage trust Douglas’ loan is in, but is not the document custodian. Wells, as the SEC documents say, has that job. What’s less clear is why Deutsche didn’t tell the associate to call Wells or why someone at Bank of America didn’t look up the same SEC filing I did. Instead, Owens, based on the information from her associate and doing no checking of her own, signed the lost-note affidavit. Douglas’ loan had officially disappeared.

(See 10 big recession surprises.)

In early November, based on my research, Bank of America retrieved Douglas’ original promissory note from Wells Fargo. The bank spokeswoman says it plans to soon file the note with the court. Bank of America says it is reviewing Douglas for a loan modification. But if he doesn’t qualify, now that Bank of America has the original note, Douglas is sure to lose his house. If Douglas’ mortgage is any indication of what’s out there, while embarrassing for the banks, it suggests the cleanup will be less costly than feared. Still, it’s not going to end soon. Multiply the four hours it took me to find Douglas’ loan by 400,000 — one professor’s estimate of the number of missing notes. Banks will be at this for a while.
This is an abridged version of an article that appears in the Nov. 29, 2010, print and iPad editions of TIME magazine.

See 25 people to blame for the financial crisis.

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35 Responses

  1. Suddenly even though I sit here with a stamped paid in full note d/t release and letter of satisfaction ……………Suddenly I have become a veteran borrower …yes I have been given the veterans entitlement to the original loan that was put in place in 1987 on my home in Virginia..A Lost Note Afffadavit was recorded in Duval County Fl…on my Virginia home…….Problem ????? I didnt even move in until I assumed the loan from a non veteran who assumed from the original veteran until 1992……I have never served in the military though I am now the proud owner of a va loan recorded against this house that is paid off. Note is not missing not destroyed its right here……….and I am threatened every few months with a new company who is foreclosing …………..I am headed to ask a judge to stop this in the morn. wish me luck I need it no money left,disabled children and am a widow………Sheeshhhhhhhhh. I have one of those unbelievable stories no one believes

  2. If you live in GEORGIA, contact me if you are having problems with Bank of America. I might be able to help you. Sonya

  3. Good Joyce. I will be thinking of every SINGLE way that I can to get people informed and gather group together. Talk to you tomorrow. I will throw everything out on the table and then we can talk about what will work. I agree, we don’t have much time. But we can also work to right a wrong if it happens by the law..we will have to overcome it.

  4. Okay J. I can see you are really excited about getting something going. I am going to take a look at what is available here in Texas and who would help us get the word out here. Will get back with you tomorrow. I think you are right, if people know there is an organization to go to, they will get it touch. The real problem is I believe that we are short on time so one would say “time is of the essence”. I’m sure some of the others have some good ideas as well. One thing I think will help us a lot and that is to put the lenders/servicers on notice that we are now forming our own tea party version or whatever you want to call it. I am not a member of the tea party but I have a lot of respect for their calm and controlled strength. We can come up with our own organization – whatever, but let’s get going. I have a few contacts with the newspapers here in TExas so let’s get some ideas together like J. said and get the word out.

  5. The AG’s may be doing okay but the fact that they haven’t kept us better informed is worrisome to me. They may be cutting a deal with the banks that is not going to set well with us so we need that voice right away.

    We need a chairman to step forward to claim the seat. And what is so good, our guys are highly qualified in this field. That is a tremendous advantage. So now is the time. let’s get going.

    Thanks Anonymous, so glad you agree. It is important to have your participation along with Neil and Davies and some others.

  6. Lets do it. How to? How can we spread the word? I have been thinking of ways. EVERYONE needs to know. All those who do not read, don’t own computers, don’t speak English, just don’t know anything about it. ….EVERYONE. We can’t just sit in our soon to be non-existant homes and fear the inevitable…that is what they want. They want to silence us and keep us as weak as possible. WE DO NOT NEED TO STAY SILENT and sit in our homes and cry. NONE of us deserve this! I am trying to figure out how to gather people together, that will require lists. State by State? Can we get a programmer to help us with a database that you can enter info on a website? We need to collect all data from computer users that we can…then move to the non-computer users. What about ads in the paper….how can we get people to get up and do SOMETHING? I’m just grasping at anything I can up with…ideas?

  7. Anonymous,

    I agree with ending the eating out.

    If you can not pack a lunch or take simple snacks like string cheese with you, then patronize places with a ‘Dollar menu’ and STAY WITH JUST THOSE ITEMS. The restaurants are banking on SOME regular priced items. You are going to have to ween the kiddies off the ‘McKiddie” menus.

    I have not been to a movie in a long time. Hopefully people are accessing movies via the internet and cable rather than the movie theaters with the overpriced treats.

  8. Joyce Louise

    YEA – Too!!! Been talking about organizing for a long time!!!!!!!

    Let’s give up the eating out (really – that is large part of what we have left in America) – and let’s get organized!!!

  9. Roger and J are on i t.

    Now I hear something else on this blog talks about getting organized. Yea!

  10. Get some help!
    please visit CPAC’s web site Its time America re-focuses in the right direction. CPAC’s phone number is 866-773-7864

    Read more:

  11. link to live hearing going on today on servicers started at 6;30 pst


    As electronic discovery requirements continue to increase in light of the ever-expanding universe of digital data,many firms are questioning more than ever the way in which they conduct electronic discovery. In a market that
    has over 600 vendors and is growing at approximately 21% per yeari, there are many options available to thosesourcing electronic discovery tasks. With this sourcing in mind, organizations are having to make important strategic decisions on whether they outsource or insource specific technology and expertise.As the ultimate goal for organizations appears to be centered around how they can leverage internal and external resources to efficiently enhance, and transform their electronic discovery efforts, the following definitions and thoughts are provided to help legal professionals consider the balancing of options and opportunities as they seek to “right source“ their electronic discovery requirements.



  14. I agree we need a group, organization…does anyone know of any that I could be part of? It seems to me that there are not near enough people here commenting. I don’t care if its sad stories, or lawyers who want to help or what…but considering the LARGE number of those affected, shouldn’t there be more people here? I think that the word must be spread. The only strength we have is in being organized. If anyone is interested in grouping and trying to spread the word, let me know..we can work together to get this out to more who need to know. I JUST found out about this 3 weeks ago…I am sure that there are thousands (millions) who don’t have a clue! I am in marketing…so if anyone has any great ideas, I am open to your thoughts!

  15. We need our own Committee. Always need Neil – but need to stand up and be heard.

  16. Let me add – footnote 35 from the TARP Congressional Oversight Panel. See Below.

    Congressional Oversight Panel
    November 16,
    35 “There are two documents that need to be transferred as part of the securitization process – a promissory note and the security instrument (the mortgage or deed of trust)……….

    Without the note, a mortgage is unenforceable, while without the mortgage, a note is simply an unsecured debt obligation, no different from credit card debt.”

    My friends, the mortgage foreclosures are no different from credit card debt. And, Congress should have emphasized this – before they denied bankruptcy reform – TWICE DENIED by Congress. But, they really did not have to implement bankruptcy reform – it was already in place for discharge of mortgage unsecured debt.

  17. The A Man

    I pulled out all money in BofA. Soon the hammer will drop. I suggest using the credit union. The new World order is alive and well and now ready to enslave the remainder of human mankind.

  18. DyingTruth,

    Title insurance is very messed up. Here is what happened. We had “settlement title agencies” acting as agents for the actual mortgage title insurers. But, these settlement agencies are now out of business – and if you ask the title agency for documents that the settlement agent had (as agent for title insurer)- well, they do not have them anymore – cannot get them – they are gone.

    This was a great post by Neil. But – telling you – insurance fraud, including mortgage tile insurance fraud – is massive.

    And, if anyone feels better about this – this is not restricted to foreclosure cases. Those that are paying – are in just as much trouble as to valid mortgage title. Mortgage title is non-existent as to numerous mortgages originated during the period in question – and that stands whether or not a borrower is currently paying – or in foreclosure.

    Keep plugging AGs!!!!! This is your chance to show your true abilities.

  19. No one gave a rat’s @ss about Assange until he threated the leak on the big banksters…this just in…

  20. GEORGE W. BUSH is also a Genius. Like him or not.

    “Be Strong and Courageous”

  21. Obama is a freaking Genius. Or whoever is behind him.


  22. Wikileaks is gonna do the job for us. The dumb banks crossed Maxine Waters, Nancy Pelosi, Harry Reid etc….

    Bank Of America is GONNA BE THE FIRST TO GO.


    1. Bought Countrywide loans for pennies on the dollar.

    2. Got TARP MONEY

    3. Did not negotiate with borrowers in good faith

    4. Their are a few dozen more criminal acts, but in the real world it apparently does not matter.


    6. Just like Enron they are doomed. finished adios.


  23. While searching through my trust, I found exactly what Neil is talking about here under the section “Prohibited Transactions”

  24. I don’t have the link but we had sometime in the past a response from a former WFC employee stating that they did archive the notes,, supposedly at “Iron Mountain” … which invalidates all of the trusts as the notes were never delivered.

    I have WFC… I am not in foreclosure , they claim to be the lender although we know the loan was securitized and we are assuming they (as was their custom) held the note and failed to assign it.

    The question is what is the best course of action.. Quiet Title? TILA Rescission? or What?? and what can be done beforehand to document things as they are at this time…

  25. To BSE:

    Well Put my friend. I agree with every word.

  26. 1. Banks and Wall Street can lie, cheat, and steal, they take your savings, The FED forces you to use their megar mutaul funds while they dwindle your investments and next they take your home. This government rewards these S.O.B.s with your tax dollars. Still they point at others for the blame. If the average middle class citizen would lie to the government then we go to jail. The laws of this land only protect the Aristocrats on Capital Hill. Everyone else is just $hit on their shoes.
    Never again. Time to put an end to the corruption

  27. Banks and Wall Street can lie, cheat, and steal, they take your savings, steal you investments and now your home. This government rewards these S.O.B.s with your tax dollars. Still they point at others for the blame. If the average middle class citizen would lie to the government then we go to jail. The laws of this land only protect the Aristocrats on Capital Hill. Everyone else is just $hit on their shoes.

    Never again. Time to put an end to the corruption






  30. Mr. Niel F Garfield I have a few questions to ask, prior to purchase of the Combo title and securitization search, report, documents, analysis & commentary. (A) will this search show the chain of title since my deed of trust was recorded 3-22-2006? (B) Will this search show who is my note holder-lender- (the deed of trust has the lender listed but this lender filed bankruptcy in 2007)? (C) will this search show who, and where the trustee listed on the deed of trust can be located (D) will this search show if my Note-the original documents, and the mortgage loan have been seperated? (E) Will this search show a correct and accurate legal description of the property listed on the note?(or will it show just what is on the recorded on the deed of trust)—- I have purchased 3 seperate title search’s over the past 3 months and all have different information, however all are still showing my lender on the deed of trust who filed bankruptcy in 2007 and is no longer in business. (Will this search) show who is my real lender/holder of the note? One last question, the deed of trust has a “Note” showing MER’S listed as a nominee, and beneficiary (will this search) show if my note has ever been, sold, transferred, or removed from the deed of trust, and will it show to whom/who, when, where, and for what amount? and would a “Quiet Title Action Suit” do any of the questions ask above. thanks, larry and lena walker at

  31. Neil,
    Important question, what heppens with isurance coverage for Title, Mortgage etc.. when the loan is sold?

    The loans were rigged to default well after loan transfer and I haven’t heard or seen of any banks making claims on any of the insurance. I think all the insurance companies were just in on the take and just as guilty.

  32. What are CountryWide/BofA & BoNY-Mellon & Litton to do now that a Litton employee generated a bogus assignment of the deed of trust and Litton recorded that document with the County Recorder?

    That Deed of Trust was recorded in Sept. 2005.

    The CWABS pool would have closed in late 2005.

    An assignment can not be done per the PSA to put that mortgage into the CWABS 2005 pool as of 2010.

    The pool is closed (if it exists) and the mortgage is supposedly in default, even per the same company whose personnel signed the bogus assignment in 2010.

    The single-step assignment into the pool also does not conform with the chain of assignments called for by the PSA.

    Litton would seemingly already be working for BoNY-Mellon as the CWABS 2005-10 trustee when Litton generated the assignment. The assignment is from America’s Wholesale Lender (TRADE-NAME of CW that was the only named lender on the original docs). The assignment is TO BoNY-Mellon as trustee for CWABS 2005-10 certificate-holders.

    So the assignment is self-serving for Litton: they are supposedly putting the document into BoNY’s control but BoNY had somehow appointed Litton.

    [A 2009 court skirmish divulged that BoNY-Mellon was supposedly acting for the investors, regardless of the lack of any assignment.

    So, with an assignment that is ‘impossible’ put into the official records and signed supposedly by a Litton in-house ATTORNEY, HOW can they put a ‘fix’ on this?

    I really want to understand how an attorney is going to explain their actions here.

  33. It took us 2 and one half years before we could get Wells Fargo to cough up the note and when we finally got a look at it, lo and behold the endorsers on that note made the whole deal look a lot different. I though that each pool could only allow 5% of the notes whereby a lost affidavit could be utilized. Perhaps that goes to the initial transfer to the custodian and not for later law suits that have now developed by the thousands.

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