Beware the “Missing Loan Documents” Letter

16 Feb Beware the “Missing Loan Documents” Letter

Recently, a colleague of mine was given a letter from a client. She had received it from a law firm, and it said:

Dear Borrower:

We are your mortgage company’s lawyers. We are attempting to reproduce certain loan documents that are now missing from your loan file. Enclosed you will find a Loan Security Agreement. Please sign it in the presence of a Notary Public and return it to us in the enclosed prepaid envelope.


The client said that she was afraid that this meant she was in some sort of trouble with her mortgage, and asked my colleague for advise.
The advise was to ignore the letter. Why? Because it really means that the lender can’t find the Mortgage Note, and is trying to “fix” things by having her sign a brand new one.
Signing a new mortgage note generally isn’t a good idea. It may create liability and make it easier for the lender to foreclose against your property. If there were violations of the federal statutes in connection with the loan, it may prevent you from suing for relief. It will restart the running of any statutes of limitations related to payments under the mortgage. And it results in there being no consequences for the lender in having sloppy (at best) or fraudulent (at worst) procedures in effect for dealing with closings and the maintenance of documents.
Check with your lawyer before doing anything, but don’t assume that there’s something wrong on your end, and don’t assume that this is something that you need to fix.

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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