“But Bondi’s communications director, Jennifer Meale, said in an email because the problem faced by Cruz wasn’t a common complaint received by the attorney general around the time of the Watson settlement, this particular issue wasn’t specifically addressed.”


‘Zombie notes’ live to haunt deed transfers

Thousands affected by Fannie Mae tactics

Here’s what happened, according to Lee County court documents:

David Cruz Jr. got what he believed was a great offer in a foreclosure lawsuit filed against him by giant mortgage lender Fannie Mae.

If Cruz deeded the modest Fort Myers investment house back to Fannie Mae, the government-backed company would release him from the loan’s $123,750 note: the obligation underlying his mortgage.

He deeded the house back to Fannie Mae, but court records show he didn’t get what he bargained for.

Now, experts say, he and thousands of others in Florida who took the same deal from Fannie are at risk of being stalked by a so-called “zombie note:” debt that appears dead and gone but still can come back to life.


1. Marshall Watson, the attorney for Fannie Mae and for Bank of America, sends a document called a deed in lieu of foreclosure to Cruz in late 2009. The document, when signed by Cruz, transfers ownership of the house in Tice from him to Fannie Mae.

In exchange, Fannie Mae agrees “that it is releasing the promissory note” and it won’t sue Cruz for money owed under either the note or the mortgage. Cruz signs the deed and returns it to Watson.

2. On Feb. 15, 2010, Bank of America – which was handling Cruz’s loan for Fannie – simultaneously records the deed in lieu of foreclosure and assigns its ownership of the mortgage and note back to Fannie Mae.

The bank handling a loan typically is assigned ownership temporarily so it can deal with the case. Bottom line: Fannie Mae now has ownership of the house in Tice.

3. On April 23, 2010, Fannie Mae records a satisfaction of mortgage, which discharges Cruz’s $123,750 mortgage.

The document does not, however, mention the note despite the language of the deed in lieu of foreclosure.

The holder of the note, whoever that may be, has the legal right to recover the mortgage money from Cruz.

You can check out the article in full here…

What a mess…