Legal Standing in Foreclosure Cases: Who Can Legally Foreclose?

When a lender initiates a foreclosure, one of the first legal hurdles they must overcome is proving they have standing. "Standing" is the legal right to bring the foreclosure action. Standing is a fundamental concept in foreclosure law that determines whether the foreclosing party actually owns the loan or otherwise has the authority to enforce the debt.

In both judicial and nonjudicial foreclosures, questions about standing can be a powerful defense for homeowners, especially when a loan has changed hands multiple times or when documentation is incomplete or flawed. During the Great Recession and foreclosure crisis, homeowners were regularly able to successfully raise a defense based on standing (often called the "produce the note" defense) to fight their foreclosure.

Now, however, banks and mortgage lenders are much more careful about addressing any paperwork gaps before initiating a foreclosure. So, the "produce the note" defense is less effective and relevant these days. Still, while a defense based on standing isn't as likely to be successful as it once was, your case might be the exception.

How Promissory Notes and Mortgage Assignments Work

When you took out your loan, you likely signed a mortgage or deed of trust and a promissory note (a mortgage note). Homebuyers sometimes think of the mortgage or deed of trust as the contract they signed with the bank to borrow money. But it's the promissory note that contains the promise to repay the amount borrowed.

When the loan is sold to a new owner, the note is endorsed (signed over) to that entity. In some cases, the note is endorsed in blank, which makes it a bearer instrument under Article 3 of the Uniform Commercial Code (UCC). The note holder or its representative is the party that has the legal right to collect the debt if the borrower doesn't make payments. (Basically, the party that possesses the note has the legal authority to enforce it.)

On the other hand, assignments transfer the mortgage or deed of trust and are typically recorded in the land records.

What Is Legal Standing in Foreclosure Cases?

Again, "standing" is the right of a party to bring a legal action. During the foreclosure crisis, which happened around 2007-2012, attorneys representing homeowners were often successful in delaying or derailing foreclosures on the grounds that standing hadn't been satisfactorily established due to gaps in the chain of endorsements or assignments.

However, the issue of standing in a foreclosure is complicated, and the law varies between states. In most courts, the foreclosing party must establish that it holds the note or is acting as the note holder's authorized representative to have standing to foreclose. State foreclosure laws typically require the foreclosing party to include a copy of the note with the complaint in a judicial foreclosure. In addition, the foreclosing party might have to produce the original note (the one the borrower actually signed) as part of the foreclosure process. However, in some cases, the court might accept a lost note affidavit (see below).

Because mortgages, deeds of trust, and assignments are recorded in the land records, unlike notes, they're part of the public record. So, the foreclosing party might not have to produce the original mortgage or assignments. A reference to those documents, along with copies, could be sufficient. When it comes to assignments of mortgages (or assignments of deeds of trust), many courts follow the general rule that "the mortgage follows the note."

So, if the foreclosing party has the right to enforce the note, a recorded assignment of the mortgage might not be needed. But other states require a valid assignment, or the foreclosure can't go forward. In Wyoming, for example, all assignments must be recorded prior to the start of a nonjudicial foreclosure. (Wyo. Stat. § 34-4-103 (2025).) Michigan law requires a valid chain of assignments before a nonjudicial foreclosure can proceed. (Mich. Comp. Laws § 600.3204 (2025).)

How the "Produce the Note" Foreclosure Defense Works

The "produce the note" defense is a legal strategy that homeowners or their attorneys sometimes use in foreclosure cases to challenge the lender's authority (standing) to foreclose. It's based on the principle that only the holder of the original note (or a party with proper legal authority) has the right to enforce the debt and initiate foreclosure proceedings.

This defense gained traction during the foreclosure crisis. The produce the note defense frequently worked because coming up with the original note was typically difficult. Often, the debt had been sold many times. Or perhaps the loan was bundled along with thousands of other loans into a mortgage-backed security. The new loan owner sometimes didn't get the proper paperwork to show that it owned the note and mortgage. Even in situations when the original note was available, the endorsements typically weren't in order. In these cases where the lender couldn't produce the original note or show a clear chain of endorsements and assignments, courts in some jurisdictions would halt or dismiss the foreclosure.

Banks and investors buying mortgage loans are now more careful about addressing any paperwork gaps before initiating a foreclosure. Also, courts all over the country have heard many cases on this issue and have decided against homeowners in multiple situations. Some courts allow a copy of the note or a lost note affidavit to suffice. It's now much more difficult to win your case based on a "produce the note" type of argument.

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Why the Produce the Note Argument is Less Effective Today

Recent legal developments and court practices have made the produce the note defense less effective.

Courts Increasingly Accept Copies or "Lost Note Affidavits"

Many jurisdictions now allow lenders to proceed with foreclosure if they can provide a copy of the note or a sworn affidavit explaining the loss of the original, as long as they can demonstrate ownership and the right to enforce the debt. If the note has been lost, destroyed, or is otherwise unavailable, the foreclosing party will frequently use a "lost note affidavit." A lost note affidavit is a sworn legal statement in which the bank states the note is lost or destroyed, or something similar, but that it is the true and rightful owner of the note and has the right to foreclose. Using this type of document often circumvents the problem of not having the original note.

For example, Florida has a law that generally requires banks to produce the note at the time of the foreclosure. As of July 1, 2013, a plaintiff (the foreclosing bank) in Florida must prove its right to foreclose by filing additional items along with the complaint, including a certification that the plaintiff is in possession of the original note. But if the note has been lost, the plaintiff can provide a lost note affidavit with a clear chain of all endorsements, transfers, or assignments of the note. In the case of Hines and Long v. New Urban Pine Road LLC, Case No. 3D16-1168 (Fla. 3d DCA Feb. 21, 2018), the court decided that ownership of a lost note and standing to foreclose can be proven by an unbroken chain of assignments from the originating lender to the present loan owner.

In Jones v. U.S. Bank National Association, 136 Nev. Adv. Op. 16 (April 2, 2020), the Nevada Supreme Court held that a foreclosing bank who doesn't hold the original promissory note may proceed with foreclosure proceedings after submitting a lost note affidavit and other evidence showing that they're entitled to enforce the misplaced note. But some cases involving lost promissory notes in Nevada could require the bank to foreclose judicially rather than nonjudicially.

Whether a lost note affidavit will be acceptable in any given foreclosure depends on the situation, jurisdiction, and court. In many cases, the court will find a lost note affidavit sufficient and allow the foreclosure to proceed. So, unfortunately, it's often an uphill battle for homeowners to use a "produce the note" defense.

Online Information and Myths About "Produce the Note" Still Persist

Despite its reduced legal power, the "produce the note" concept remains widely discussed online. Some websites and forums still promote it as a defense, and people continue to search for information about it, sometimes falling prey to scams or misinformation.

Legal Standing Can Still Be a Valid Foreclosure Defense

While the "produce the note" defense has become less effective over time, legal standing remains a valid and potentially powerful foreclosure defense under the right circumstances. If a homeowner can show that the foreclosing party lacks standing, the foreclosure action might be dismissed or delayed.

Courts take standing seriously because it ensures that only the rightful party can enforce the loan and collect the debt. While fewer cases are dismissed on these grounds today, standing challenges can still succeed, especially when lenders fail to document transfers properly or can't meet state-specific legal requirements.

If you have reason to believe that the party that's foreclosing on your home isn't the actual loan owner and doesn't have the right to foreclose, but you don't challenge it, the court won't examine this issue as part of a judicial foreclosure. The same goes for a nonjudicial foreclosure; the foreclosure will simply proceed.

Raising a Standing Defense in Judicial Foreclosure Cases

In a judicial foreclosure, the bank files a lawsuit in state court. You'll receive a foreclosure complaint, petition, or similar document, along with a summons. In this type of foreclosure, you can raise the issue of standing as part of that lawsuit.

Raising a Standing Defense in Nonjudicial Foreclosures

With a nonjudicial foreclosure, the bank can foreclose without going to court. So, you'll need to file a lawsuit to bring up this issue.

Talk to a Foreclosure Attorney About Standing and Other Defenses

Again, even though the "produce the note" defense is less likely to succeed today, your case might be the exception. Homeowners are occasionally able to use a defense based on standing to stop a foreclosure, even if only temporarily. You'll most likely need an attorney to help you review your ability to raise a defense based on standing and argue it in court if you decide to go this route. These days, you will most likely be setting yourself up for frustration if you just demand that the foreclosing party "produce the note."

Also, any given foreclosure or legal situation has many potential claims and defenses. You might be missing other legal claims that you could bring as a defense to the foreclosure action if you decide to proceed without an attorney's assistance.

Consider talking to local counsel or a legal aid organization to explore all possible defenses that could be available in your particular situation.