We represent quite a few clients who purchase non-performing notes and mortgages. We sometimes are called upon to negotiate a workout with the borrower, or a deed in lieu of foreclosure. Sometimes we even have to represent our client as the successor lender to foreclose the property. In that experience, we’ve learned that there are certain documents that are essential to helping the workouts or foreclosures and the subsequent closings go smoothly. Here is a checklist of those documents that a client should always require that the prior lender provide to them to ensure that things go smoothly:
- The Original Promissory Note. If the original is lost, then a copy of the original executed note along with an affidavit of lost note from the lender who last had custody of the original.
- An original allonge to the note, or endorsements of the note. Be sure that there is a clear chain of custody from one endorsee to the next, and that there are no gaps in the chain.
- The Original Mortgage. If this isn’t available, then obtain a certified copy of the recorded mortgage from the public records.
- The Original Mortgage Assignment from the current mortgage holder, properly executed. Also get all assignments in the chain of custody and ensure that there are no gaps.
- The Original mortgagee/lender’s title insurance policy that was issued at the time the loan was originated.
- A current ledger of the account that shows a full history of all payments that have been made, including all credits and loan charges to current.
- Copies of the closing documents from the initial closing, including Truth In Lending Statements, Good Faith Estimates, Settlement Statements, and any and all other statutorily required documents from the closing as signed by the borrower(s).
- Copies of any servicing and default letters that have been sent to the borrower during the loan’s servicing.
This is not a complete listing, but it’s a list of the most essential and basic documents that the new mortgage holder’s counsel will need to either work out a loan or foreclose it in the new holder’s favor, or close the sale of the property after the holder takes possession of it.