“Produce the Note” Dates Back to 1600’s

March 9, 2009

The “Produce the Note” strategy is giving hope to thousands of homeowners facing foreclosure in today’s dismal housing market, but the concept is far from new. The Original “Produce the Note” strategy dates back more than 300 years, and is still valid today.

Producing the Note in the 1600′S

When a debt was owed in colonial America and in Merry Old England a simple devise was used to make sure the proper parties were before the court. This was the use of an “indentured” document. The indenture refers to the jagged cut on either the top or bottom of the legal document. When property was sold and the bank held a mortgage, the deed and mortgage were originally one document. The documents were separated with a jagged cut or indenture.

To prove that you were the holder of the note it was required that you “Produce the Note” in court. The two documents were then placed together to see if the document’s jagged edges matched. If the indentures or jaggedly cut edges did not match exactly, then you were not the proper party and the suit was dismissed.

This is a picture of an indenture dated 1634:

Producing the Note Today

Many of the mortgage companies and banks of today lost touch with this very basic, simple concept– that if you want to collect a debt from someone, you better have the proof that it’s truly owed to you. That is the basis for the “Produce the Note” strategy.

Unfortunately, as the companies of today were wheeling and dealing and trying to maximize profits by moving mortgages like hot-cakes into securities, they were very sloppy with their paperwork. In other words, they lost the note– the proof that they have a right to foreclose on that mortgage when it goes into default.

While we no longer require the jagged edges to fit together on an indentured document, the modern court system still requires proof that a party is owed the debt, just as it did 300 years ago.

So, a company trying to foreclosure on a mortgage must prove it is the proper party. It does this by producing the original note for the court to see. If they can’t produce the original note, or prove they lost the note, then they are not the proper party to foreclosure.

The concept gets a lot hazier in today’s electronic world, where documents are all scanned and emailed and faxed and copied. Think about it. You could have 100 copies of the same document floating around out there. That’s why it’s so important to see the original, with real ink and all.

Maybe it’s time to go back to the jagged edges. A simple concept, from a simpler time sure sounds good at a time like this.

By John Newcomer. Angie Moreschi contributed to this report.