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Save Your Filing Cabinet—It’s Not Quite Obsolete By Joseph Capobianco

April 23, 2012 Posted in: Our Blog

Don’t throw away your filing cabinets yet! As our world goes paperless and our computer’s hard drives replace filing folders and drawers, our legal system is still requiring original mortgage documentation, forcing us to find ways to balance the need of evidence with the electronic age in which we live.

The current mortgage crises has created a common scene of frequent, sloppy assignments of mortgages and a common practice of transferring mortgages upon default, so that the new mortgagee has to manage the hassles of foreclosure. This practice is becoming fatal for the plaintiff-mortgagee, which must establish a prima facie case in order to foreclose.

Indeed, some courts are now ruling that the plaintiff must demonstrate ownership of the mortgage by producing the original note and mortgage or otherwise face dismissal based on lack of standing. Both the judicial and the legislative branches of our government are reacting to the messy and irresponsible storage practices of mortgagees and the rampant electronic assignment of notes during this unprecedented era of a record number of foreclosures throughout our country resulting in an alarming number of families losing their homes. Courts are attacking unprofessional practices by both lending institutions and the low-cost, high yield mortgage mills that have popped up in recent years.

What this means for our clients is that as these new evidentiary requirements are in place and are being further developed, we must caution against the sole use of electronic storage. Losing track of the original mortgage documents can be detrimental to a future foreclosure case. The rigid burden of proof requirements demand that the plaintiff-mortgagee plan for the worst case scenario. In fact, dare we even suggest that while it is important to step into the electronic age, perhaps it is not quite time to place those filing cabinets out on the curb—at least not yet.

For more information and further discussion, please see my article in April/May issue of The Nassau Lawyer, The Higher Burden of Proof Required for Mortgage Foreclosure Actions , written with my associate, Gabrielle Schaich-Fardella.