The Tale of a Lost Mortgage

Debris
The foreclosure mess that has entrapped Douglas and so many other homeowners is not easily explained. Banks that make a loan on a property are required by law to keep the physical note governing the loan. Losing the paper can be attributed to carelessness, but in some instances, banks cut corners to save costs. Some people believe that banks were also losing mortgages to hide evidence of their shoddy lending practices. "It would be absolutely the norm not to have much paperwork when the underlying loans themselves were frauds," says William Black, a former bank regulator and professor of law at the University of Missouri–Kansas City.

• Foreclosure Foul-Up: Tracking Down Those 'Lost' Mortgages