Bank lost promissory Note

happy_worker

LoanSafe Member
Hello everyone,

I am sure my issue is a fairly common problem, but I wanted some advice to make sure I protect myself.

We recently purchased a home and the bank we used (a credit union) has already sold our mortgage to another company. The credit union mailed the original note to them and apparently it was lost in the mail.

The credit union called me and asked me to come in to sign a new note. Is this okay? I asked them about an Affidavit of Lost Promissory Note and Indemnity Agreement (found out about this through some Google searches), but the person at the credit union told me "this has not happened to me before and I will need to talk to my supervisor about it."

Would you advise me to go ahead and sign a new note? I am afraid if I refuse to sign the new note, that the bank that purchased my loan will no longer want it, and then I may be without a house :(

Thank you for any advice you can provide.
 

Jzone

LoanSafe Member
Hello everyone,

I am sure my issue is a fairly common problem, but I wanted some advice to make sure I protect myself.

We recently purchased a home and the bank we used (a credit union) has already sold our mortgage to another company. The credit union mailed the original note to them and apparently it was lost in the mail.

The credit union called me and asked me to come in to sign a new note. Is this okay? I asked them about an Affidavit of Lost Promissory Note and Indemnity Agreement (found out about this through some Google searches), but the person at the credit union told me "this has not happened to me before and I will need to talk to my supervisor about it."

Would you advise me to go ahead and sign a new note? I am afraid if I refuse to sign the new note, that the bank that purchased my loan will no longer want it, and then I may be without a house :(

Thank you for any advice you can provide.
Mortgages are sold all the time and actual copies do get lost. However, the deed and mortgage is generally recorded with your county clerks office. Check with your state as each state varies on what is required.

I would contact the company that your mortgage was sold to. You are probably making payments to them now?

The problem I see with signing a "new" note, is discharging the "old" note. You dont want two mortgages hanging out there. Its really the banks responsibility to fix this, not yours. If they cant find your old note, how will they discharge/release the original loan/lien?

Do you have a copy of your original mortgage? You should of recieved a copy at closing.
 

happy_worker

LoanSafe Member
Mortgages are sold all the time and actual copies do get lost. However, the deed and mortgage is generally recorded with your county clerks office. Check with your state as each state varies on what is required.

I would contact the company that your mortgage was sold to. You are probably making payments to them now?

The problem I see with signing a "new" note, is discharging the "old" note. You dont want two mortgages hanging out there. Its really the banks responsibility to fix this, not yours. If they cant find your old note, how will they discharge/release the original loan/lien?

Do you have a copy of your original mortgage? You should of recieved a copy at closing.
Hello!

Thank you so much for your reply. I am going to answer your questions in order:

1. Unfortunately, I don’t know who the credit union sold my mortgage to yet. My first payment isn’t due until July 1st. I can find that info out though from the credit union, but we just closed on our home about 3 weeks ago.

2. The credit union did include 1. Affidavit of lost promissory note (notarized) and also included the indemnity clause (also notarized) which basically states I won’t be liable for any charges/fees/etc that could arise from the first note.

3. Yes, both myself and the credit union have a copy of the original note that we signed, BUT the credit union says they must send an original to the company that bought my mortgage loan (that’s why they want me to come sign the new note).

I hope that all makes sense.

Thank you again for your help! :)
 

OneHugeMess

LoanSafe Member
You should absolutely REFUSE to sign anything. You would only be doing the bank or credit union a favor at this point.

In this case, they screwed up, but it will have no bearing whatsoever on your loan, and they can not accelerate or call the mortgage due. What will happen, is the loan will lose a small amount of value on the secondary mortgage market, so, they will likely lose 4 - 6 cents on the dollar for your mortgage. In addition, should you ever fall into foreclosure... you will have significantly more legal protection, and it will be very costly and lengthy for them to foreclose.

I would tell them point-blank that you will not be signing anything, beyond the monthly payment checks, and to pound sand. You could also consult an attorney, who would give similar advice and probably also tell you that you have room to renegotiate the original terms.

I would definitely not be in ANY rush to follow up with them. Only you can decide what you wanna do. But, I personally would not sign.

I had an extremely similar situation which ended up with Bank of America completely forgiving a 2nd Mortgage.
 

Survivor_IN

LoanSafe Member
This is generally how people get defrauded. (or in this case, other banks maybe) Trusting the person at closing that "needs" the consumer to sign "extra" copies because the original was wrong or was ... "lost." IE now they can sell two notes AND you are assured you are not liable. Oh what fun. Why on earth was this "lost" so quickly? Hmmm. Red flag. Red flag. Red flag. People who commit fraud are generally people you know and trust. Fraud, in general, happens through social engineering. You trust that person.

If you have already closed on the house (and loan), how can they NOT follow through on the loan? You would have ample rights to sue. If they can't sell the note, then you are better off with a local credit union that will be invested in the mortgage. I'm sure they will pressure you to sign and I'm sure this is for their benefit. The only difference would be a larger lender, one who buys notes and mortgages, would transfer you to their servicing agent for payments.

I honestly can't say if this is harmless error or not. But it is not good to have this from inception. By the way, who lost this anyway? The buyer or the seller of the note? I would not be signing another "original" duplicate personally.
 

Survivor_IN

LoanSafe Member
Also, if a "note" is worth say, $500,000 (sales price of house), why would it not be transferred to the vault immediately? Closing agent is suspect. Party wanting extra note is suspect. I bet this makes news in around 2 years when there's a history or the feds catch him/her/them.
 
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