Podcast Transcript:

There are a lot of common myths out in the industry about loan modifications and mediation. One of them is that in Nevada, the lender has to quote, “Produce the Note!”

Myth Number 1- The Lender Must Produce the Note!- The Produce the Note idea started because when a party’s original lender made the loan, they may have turned around and sold it to a larger bank, and they may have turned around and sold it to a large investment house like Merrill Lynch, Bear Sterns or Leehman Brothers, who may have turned around and put into a syndicated package of ten thousand loans from all across the country. Then sold that syndication, very similar to a real estate investment trust investment; where you could buy shares in that syndication. The way they sold them five years ago, it seemed like it was a great investment. One could make three times as much money as you could at the bank, with no risk! The logic was, who’s not going to make their house payment? Well, times have changed! A lot of people are not making their house payments. So in Ohio and in Pennsylvania (and a few other States), there were some State and federal judges who told parties who wanted to come in and foreclose people;

“Before you can foreclose them, you have to produce the original note and the deed of trust, and any assignments from the first lender, to the big bank, to Fannie Mae or Freddie Mac, to the big investment house, and out into syndication. Because, how do we know you really own their mortgage, and we’re not going to let you to foreclose their house if you really don’t own the mortgage.”

That happened in a couple of States in the 2006 to the 2007 time frame. That’s where the Produce the Note language came from.

Today, in Nevada, there is no requirement to “Produce the Note”. There was a federal case decided in Southern Nevada in early 2009 where the federal judge determined there is no requirement to produce the note. At mediation, because of a statute, the bank does have the requirement to “Produce the Note”.

If you are going to a loan modification company or an attorney who is telling you they are going to fight to keep your house by sending out a qualified written request for all your information, and find out what the bank did wrong on the loan, and if they committed fraud, and then we are going to ask them to produce the note; you are totally wasting your time and your money and the net result is very likely going to be that you are going to loose your house!

The second thing I want to talk about is the topic I briefly mentioned above, and that is Sending out a Qualified Written Request, and asking the bank to send to your loan modification company or your attorney all of the loan documents pertaining to your original loan. That’s fine! This law office has done the same thing many times. The problem is, in Nevada, lenders and escrow companies, and title companies, and loan officers, and escrow officers have limited, if any, fiduciary duties to borrowers. That means, It is a let the “buyer beware” State! If you go get a mortgage, it’s presumed you know what you are getting yourself into. It is not the escrow officer’s duty to explain it to you. It is not the loan officer’s duty to explain it to you or make sure those terms are acceptable to you. It’s your duty to know (the borrower)!

So if you ask for a qualified written request, and you get all the documents from the bank, and you see that they forgot to have you sign this document or they fail to do something that is minor in the scheme of things, there are people out there that are telling you:

“Ah, you can use that to get out of your whole loan. You can get the bank to write off your whole loan!”

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Well, I have been an attorney in Nevada for seventeen years working primarily in the area of real estate law, and I have represented well over one hundred homeowners in Las Vegas and other parts of Nevada in loan modification and the mediation process. I have also represented approximately 15 to 20 of them in litigation in District Court and Federal Court in the Southern District of Nevada. I know other attorneys, some of who have filed as many as three hundred lawsuits in this area. I have not heard of a single case where the plaintiff (homeowner) prevailed based on a fraud theory. Not a single one! There may be some, but there aren’t very many. It is not a useful area for you to expend your efforts and your money trying to save your home.

The bottom line is that you are highly unlikely in litigation, or in a demand letter, or in any communications with the bank, to get them to write down your principal balance, to get them to write off your mortgage, to get them to do anything useful to you; pertaining to an error that was made in your closing documents or anything pertaining to a fraud claim. It just isn’t happening. I know cause I have represented clients in this area, and at the end of the day, we’ve ended up getting them loan modifications because that was the only thing that was available to them.

So I caution you! Don’t get ripped off an inexperienced attorney. By an unlicensed loan modification company. If you are going to look at this area of law, or if you are going to seek information on how to save your home; if you are going to find a clean way of breaking from your home and giving it back to the bank, then make sure you go to a licensed Nevada attorney that knows something about real estate law. They must have experience in real estate law and have actually helped homeowners just like you! Don’t make the mistake of going to an unlicensed loan modification company, or an out of State loan modification company, and don’t go to a local loan modification company who tells you, “Oh yeah we are backed by an attorney and we’ve got an attorney here, but you don’t actually meet with the attorney.”

You can come to my office and have a FREE Consultation with me (David Rahm), because I will find out what your circumstances are, and determine what the best course of action is. That is the only way, you can effectively protect your rights!

Call David Rahm for a FREE CONSULTATION at 702-369-4663