Consumer Warning Network Says “Produce the Note”

How do you stop the foreclosure crisis?  The most successful way might be the method that was revealed on Tuesday’ edition of Good Morning America.

In a segment on this morning’s show, reporter Jim Avila told the stories of several individuals who have managed to draw out the foreclosure process by demanding that banks “produce the note” to their home.

Often times, these notes have been sold and re-sold, then traded on Wall Street leaving the lenders with no idea as to the whereabouts of the actual note itself.

Avila talked to attorney Chris Hoyer who manages the Consumer Warning Network (CWN), a group whose purpose is to investigate fraud by large companies.  The website also offers free template legal documents.

The most popular template on the Consumer Warning Network website is a document that asks lenders to produce the note that proves a debt is owed by the homeowner.

What’s really amazing is how long it has taken for such a simple idea to catch on.  The video below from the Consumer Warning Network is from last summer, so the idea is clearly not a new one.

Suddenly, the word is spreading like wildfire.  In fact, as of this writing, the Consumer Warning Network website is down, presumeably from the flood of traffic it’s receiving.  It was already getting over 20,000 hits per day before this morning’s “Produce the Note” story ran on Good Morning America.

The video from last summer is below, along with the trascript from this morning’s GMA broadcast.

What do you think?  Is this really a good idea, or should homeowners be held accountable?…

DIANE SAWYER: Something new from the front lines of the housing crisis this morning. As we know, a quarter million Americans got a foreclosure notice last month. Homeowners doing whatever they can to stay in their homes. But it turns out, there is a new tactic. It’s a new phrase, that could buy you time. And senior justice and law correspondent Jim Avila is here with it. Jim?

JIM AVILA: Diane, it could be kryptonite for homeowners, all that fancy accounting, the transferred mortgages between banks and into bundles of mystery bonds that traded on Wall Street. Well, that could make it impossible for you to know who you owed money to. But in the end, it could actually help put the breaks on foreclosure. Sunset, outside Tampa, Florida. And Kathy Lovelace, has to use a lantern, to show us the house she’s fighting to save from foreclosure.

KATHY LOVELACE (Fighting foreclosure): This is my favorite room right here. My exercise room.

AVILA: Kathy lost her $40,000 a year accounting job. She can’t pay her mortgage or her electricity bill. And without power in her middle class suburban home, keeps what food she can afford, in an icebox.

LOVELACE: Keep my drinks and stuff in here.

AVILA: She’s living in the eye of the bad mortgage storm that has hit America’s mid-section to the tune of 9,000 foreclosure filings a day in January of this year. But Kathy Lovelace is determined not to turn over her house to the bank.

LOVELACE: I’m going to fight them tooth and nail because they’re crooks. They’re out there, sitting in their $1 million homes, while we’re out here scrimping. And no electricity.

AVILA: Kathy’s tactic, stall. And her tool, now being used with some success around the country, is one, important legal phrase. Three, simple words, produce the note.

LOVELACE: I filed the produce the note. And I haven’t heard a word from anybody.

AVILA: Like many of America’s mortgages, hers was sold by her bank and bundled. Then sold into nearly unrecognizable loan packages, traded on the stock market. Bottom line, when Kathy Lovelace asked the loan servicer-

LOVELACE: Who owns my loan? And her- she told me, I don’t know.

AVILA: A Florida lawyer named Chris Hoyer, started the Consumer Warning Network and is behind the produce the note movement here, offering the paperwork on his website.

CHRIS HOYER (Consumer Warning Network): We’ve never seen a company produce the original note yet.

AVILA: Hoyer says judges have stalled foreclosures because the banks can’t find the original paperwork.

HOYER: If you just held on to that house, stall the proceedings as long as you could, you might pull it off.

AVILA: That’s Kim Kolaski’s strategy. She lost her real estate job when the Florida market collapsed. And the bank is now moving on her little, two-bedroom house, outside Tampa. You’re still fighting.

KIM KOLASKI (fighting foreclosure): Yeah. I’m a fighter.

AVILA: She bought in the neighborhood where she grew up. A little place for $39,000. But during the big Florida bubble, refinanced and remortgaged, over and over. And how much do you owe on it now?

KOLASKI: 145.

AVILA: $145,000? Kim could walk away and suffer only bad credit. But she wants to pay and hold on. So, last week, just as the house was about to be auctioned.

FILE FOOTAGE OF AUCTIONEER: $100 Going twice.

AVILA: She said those three words. Produce the note, at the county courthouse.

KOLASKI: I have a right, as an American citizen, to, you know, file something. And put a stop to something myself.

AVILA: And then, she called her mortgage company.

KOLASKI: I am requesting that the mortgage company give me a copy or provide me a proof of the original note that I signed. Well, if they can’t prove that I owe them, why should I pay them?

AVILA: Kim says she tried to work with her mortgage company. And says this is the last, desperate tactic, to hold her house, until she can get a job and resume payments.

KOLASKI: Mortgage companies will not work with their borrowers. I’ve been told that I can’t do a loan modification because there’s not enough time. It is frustrating.

AVILA: One of the banks involved would not comment on the tactic or the specific case. The other, however, Citibank- I’m sorry. Chase, Chase bank, says, in fact, it does work with its customers and it’s working with this customer. Now, will it work at all? Judges say in most cases, it does work as a delaying tactic. Because the companies often don’t have original copies of the original notes. But eventually, they may find it in their electronic bank and that will in fact work and is accepted in court. So, this is a delay tactic mostly, Diane. It won’t totally eliminate your problems with the bank. But it can give you enough time to find a way to work it.

SAWYER: So, you’re saying by saying produce the note, they have to do all this tracking, tracing, that can take months and months and give you time?

AVILA: Absolutely. And they have got just a huge stack of these that they’re going through. What they’re going to do is probably go after those who don’t say produce the note, and go after the low-hanging fruit, and leave you alone for a while.

SAWYER: Wow. Sometimes the months are all the difference. Thanks so much, Jim. Who knew?

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