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The Foreclosing Party Can’t Prove It Owns the Mortgage

In federal courts and some state courts, only the mortgage holder (the owner or someone acting on the owner’s behalf) may bring a foreclosure lawsuit.

If your mortgage, like many, has traveled across the world and been owned by many different entities, proving just who owns it can be difficult for the last holder in the chain of title. Because mortgages are frequently bought and sold electronically, the only proof of ownership is a chain of assignments from one owner to the next. These assignments might never have been put down on paper, but rather kept in computer databases. The original mortgage document that you signed is stored somewhere, but it can be difficult for a foreclosing party to actually come up with it, or even a copy of it.

Some attorneys representing homeowners have been successful in delaying or derailing foreclosures brought in federal court on the ground that ownership has not been satisfactorily established. The legal theory involves a concept called “standing”—that is, who has the right to bring a lawsuit in the federal court. To have standing to sue about a contract, you must have an ownership interest in the contract and have suffered some loss. In several recent cases in federal courts in Ohio, the foreclosing parties were unable to establish these facts, and so the courts dismissed the foreclosure complaints.

Because these cases were decided in federal court, there is currently no good information on what type of proof of ownership would be acceptable in state courts, which frequently have different rules about standing to sue. For example, in Ohio and many other states, the Uniform Commercial Code (UCC) gives a long list of persons connected with a loan the right to sue to enforce its terms. In those states, it would be hard to get a foreclosure thrown out by arguing that the wrong party brought it.

These cases can be difficult to bring and argue, and you may not get very far if you try to do it yourself. On the other hand, some federal courts are friendlier to self-represented people than are state courts, and Nolo has an excellent book on representing yourself under the federal rules of civil procedure. See Represent Yourself in Court, by Paul Bergman and Sara Berman (Nolo).