So many foreclosure cases have been processed without original paperwork in the last few years that the state of North Carolina has taken the issue all the way to the state supreme court. Last week the court heard testimony from attorneys representing Wells Fargo and homeowner Linda Dobson, who is facing foreclosure. Dobson is arguing that Wells Fargo cannot foreclose on her home unless the produce the original promissory note that proves they are actually due the debt that she owes of about $50,000. The lender has not produced this documentation in three years of legal wrangling. Dobson’s lawyer says that she cannot pay or be foreclosed on because she is “not clear who owned her mortgage.” Wells Fargo, on the other hand, says that although it has not produced original documents yet, it likely will if the court sends the case back to a lower court for trial. The lender is arguing that “photocopied loan documents and sworn statements from employees that it is truly owed the money are sufficient for the case so far.”
The problem is that in light of the robo-signing fiasco and other “loose” lending and foreclosure practices that have come to light in the wake of the housing crisis, most homeowners no longer believe that these proofs are enough. Law professors point out that “sometimes a note will be lost or destroyed,” which is the whole point of having multiple copies of the original documentation. A ruling is expected in the next few months. In the interim, Dobson will remain in her home and wait on the mortgage lender to “prove some of what that man [the Wells Fargo attorney] was saying” about her debt.
North Carolina is home to the Bank of America headquarters and has traditionally been viewed as sympathetic to lenders. Legal analysts say that the outcome of this case will likely set a precedent for future cases around the country, making it a landmark piece of litigation.
Do you think that photocopies and/or sworn statements are adequate proof of monies owed?
Thank you for reading the Bryan Ellis Real Estate Letter!
Your comments and questions are welcomed below.