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Re: Lost Note

Posted by Rick Harmon on July 12, 2003 at 1:44 PM

In Reply to: Lost Note posted by David on July 12, 2003 at 11:13 AM

: Ward,

: I'm trying to buy a note. The note is lost. We may or may not be able to find a copy, if we find a copy I know what to do because you've posted the process in the past.

: Turns out the borrower is very cooperative in this case. If we can't find a copy, is there an other alternative? Maybe execute a new note. Maybe some kind of a statement signed by the borrower as to the terms of the original note. Seems like there must be a way with a cooperative borrower.

: Note: The husband and wife executed the note and TD. The husband has left and is nowhere to be found (divorce and other problems). Both husband and wife are on title.

: Thanks,
: David

David-
I see this regularly since I work with attorneys as clients. My best advise is:

1) Have note seller provide you an "Affidavit of Lost Note" that states they have lost note, what the terms are, loan status, and that they affirm that all statements of facts are true. It should be notarized by all beneficiaries (note sellers).

2) Have borrower (trustor) sign an estoppel letter that acknowledges the loan terms and conditions (status) including the current loan balance.

3) Record a Substitution of Trustee (if a TD)

4) You can obtain a lost note bond from some title companies or specialty bond companies but I wouldn't bother. It's only a problem when you go to reconvey (sometimes) because whiney title officers want all the original docs from private bene's (you). We avoid that problem because we are considered an institutional lender
for purposes of reconveyances. Cost is typically 2-4% of face value of note. I once forclosed on a $200K TD with a missing note...never had a problem (got the property back, too)

5) The rest is like any other note purchase.

Good Luck!

Rick



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