Homeowner Stops Foreclosure after filing “Produce the Note”

March 26, 2009

By Angie Moreschi:

The “Produce the Note” strategy is giving hope to a Pennsylvania homeowner facing foreclosure.  Mark Strohecker, of Ellwood City, Pennsylvania, was successful in getting a judge to stop the foreclosure of his home, after filing a “produce the note” request with the court.

The 42-year-old former firefighter and father of two faced the Sheriff’s Sale of his home on March 11th.  Two weeks earlier, he printed the document template for a “Produce the Note” request from the CWN website, filled it out, and filed it in Lawrence County Court.  At a hearing the day before the scheduled Sheriff’s Sale, Honorable Judge J. Craig Cox, granted Strohecker a motion to stay the Sheriff’s Sale.

Strohecker says he was so overwhelmed by the Judge’s decision he broke down in tears.  Click the audio-cast above to hear Angie Moreschi’s interview with Strohecker about his efforts to save his home. Click here to read more.

Victory for Produce the Note

This is a victory for “Produce the Note,” but the fight for Strohecker’s home is not over yet.  The Judge’s order delays the foreclosure sale until May 13th. The order gives the plaintiff, LaSalle Bank National Association, time to come up with the original note, or, if it was lost or destroyed, to prove that LaSalle is the rightful owner of the note.

The Judge’s order cites a potential loan modification as a reason for stopping the Sheriff’s Sale.  “Said sale is stayed until the next sale scheduled for May 13, 2009, as there is the strong possibility of federal relief for mortgage foreclosures,” Judge Cox wrote in his order.

President Barack Obama’s recently announced housing rescue plan is supposed to help as many as 9 million American homeowners re-work mortgages into more affordable payments.  Mark Strohecker hopes this reprieve by the Judge will get his lender to cooperate with him to negotiate news terms for his mortgage.

Will the Lender Cooperate?

Strohecker refinanced his Ellwood City home for $52,000, in 2005.  At the time he paid $416/month, which he could afford on his disability check.  But it was an adjustable rate that ballooned two years later, making the payments unaffordable, and he got behind.  Now, EMC, his mortgage servicer, which is owned by JP Morgan Chase, says Strohecker owes $75,000 on the home, including late fees, penalties, attorneys fees and escrow.

Before he was in foreclosure, Strohecker says he asked EMC to work with him and modify his loan, but they refused.  After the Judge’s order, he called to ask again.   This time, he was more insistent, citing the plaintiff’s inability to produce the note, the President’s new relief plan and the millions of dollars in taxpayer bail-out money JP Morgan Chase has received.

Questionable Offer

Finally, EMC offered to work with him, but the question now is how realistic is the offer.  EMC is proposing a repayment plan that requires a $1500 down-payment and six months of payments at $470/month, before they will consider him for a loan modification.  At the end of the repayment plan, Strohecker will still owe $24,000 in arrearages, which EMC says it will request in a lump sum balloon payment, if it chooses not to modify his loan.

Strohecker says he can afford the $470 monthly payment and might even be able to scrape together the $1500 down-payment, but there’s no way he can come up with a $24,000 lump sum payment.

When Strohecker explained to EMC there is no way he could afford the $24,000 lump sum payment, they told him he would be able to apply for the loan modification after 3 months, but still no guarantees.

If Strohecker agrees to the work-out and makes all the payments, except for the balloon, EMC can still choose to proceed with the foreclosure.  That, however, would give Strohecker a pretty strong argument to take before the Judge that EMC did not act in good faith.

Time will tell whether EMC is truly trying to work with Strohecker to keep him in his home or just squeezing more money out of him before dropping the foreclosure ax, as we’ve seen in the past. We are hopeful that perhaps, with the help of pressure from “produce the note,” the tide is beginning to turn.