Please note I am not an attorney and this is not legal advice.  This technique is used by homeowners to successfully postpone the auction and is very useful for investors who are attempting to negotiate a short sale and need more time. I have left out the state as some state timeframes are different but the principle is the same.

The bank files its foreclosure and the homeowner is served notice that there will be a court hearing for  Motion for Summary Judgment of Foreclosure by the bank at which time they will set a specific date for the auction of the property. What we are looking for (and they are very easy to find) are deficiencies in the pleadings filed by the bank.

You may have heard taht with all of the foreclosures going on around the country that it has become difficult for the bank to produce original paperwork.  In this case the promissory note could not be produced so the bank was going to produce at the hearing an Affidavit of Lost Promissory Note.  This is permitted under a special state statute that creates a mechanism to prove up a financial instrument that was lost by the holder.

here is where it gets good.  The Rules of Summary Judgment say that any pleading to be used by the moving party (here, the bank) must be filed with the court and provided to the other parties at least 20 days (depnds again on your state) prior to the hearing.

The bank complied with the lost note statute (they had the lost note affidavit to give to the judge), but not the court rule about the 20 days. We argued this point with the judge and the judge agreed and denied their Motion for Summary Judgment.

This whole exercise was not to create a delay so the client can live in the house for free (which they could) we did it so that we could complete a short sale with the bank and we had a jerk for a loss mitigator who had a very large ego and was not looking out for the bank’s best interest. By completeing this short sale we also helped the homeowner avoid a deficiency judgment which could stay with them for more than 20 years (depending on the state).

Bottom line, everyone was happy.  We negotiated a short sale with the bank.  The homeowner avoided a foreclosure and a deficiency judgment against them and the bank got out of a bad deal which positivly impacts their lending loss reserves.

So, let’s chalk up a win for the small guy.

Discussion 10 Comments

    1. Hey mike, can I get a step-by-step and the paperwork that you used to do that. I have some loss mit guys who are making my life he**. This is a great idea and I know it will help me close more deals. thanks, Hulio.

    2. Hello Mike !!!
      Can send me the paper work or Forms that you used to buy time, I have a template for the Note that I can share with you and see how you feel about!

    3. Hans, I am a litigation secretary during the day, and trust me, don’t blindly rely on “forms” to buy time. The critical exactitude of wording pertinent to the circumstances and locale of the action will come back to bite you if you don’t have a solid attorney whose knowledge or research skills are up to the job of focusing on these (and other) elements and applying them to the unique situation at hand.

      I’ve worked in scores of law firms, and its blind form applications, uncrafted and misapplied, that has made Ferrari’s possible for the boys in the know.

      Just a heads up.

    4. doug albright

      As always great advice.

      thanks for sharing

    5. Ronny Alexander

      When attending subject Summary Judgement Hearing, Decent, Clean Attire, Good Demeanor and extra copies of “proof of discrepancies” are also important influences on a basically “defendant favorable” Juudge.

    6. Jerry Peterson

      Have you thought about getting a law degree? Maybe you watch a lot of Law and Order. I do think you are smarter than the average attorney. Good job Mike; it’s finding and using the technicalities to your advantage that often wins the judgment.

    7. Mike,
      I would run this by Darius or Bill Bronchick to see what they say, then possibly come up with a step by step kit or instructions on procedures to follow (for a small fee of course). Might be a winner?

    8. Thank you for the info. How would I know that they don’t have the Note?

      Also, how did this make a difference in dealing with the uncooperative mitigator?


    9. Ask the bank to produce an original copy as part of the hearing. When we went back to the mitigator for some reason :) her was very cooperative since he knew he could not push us around and that we knew exactly what we were doing.

      Mike Warren

    10. Short sale investing is still going strong, and in some areas of the country, a quarter or more of all home sales are short sales. With this kind of volume and potential, you cannot afford to be left behind

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