It’s bad enough to lose loan paperwork worth a quarter-million dollars (or more!) Now some trustees for bankrupt lenders are asking federal judges to approve a massive, intentional destruction of the original loan papers.
Why? Because it’s apparently just too expensive to keep track of these six-figure loans:
In a January 6, 2010, motion, Neil Luria, the liquidating trustee, asked Bankruptcy Judge Peter J. Walsh for permission to destroy nearly 18,000 boxes of records now warehoused by document storage company Iron Mountain Inc.
Luria stated that destruction is necessary to eliminate $16,000 per month in storage costs as he disposes of the last assets of the bankrupt company.
What will this mean for those who borrowed money from these companies? It may mean that the original note—a document essential to a proper foreclosure in judicial states—may be heading for the paper shredder. Without these documents, it becomes difficult, if not impossible, for many lenders to prove who owns, and therefore has the right to enforce, these loans.
The trustees, of course, claim that there are no longer any essential documents in the records they’re trying to destroy. But people who have actually spent time in these boxes have a different story:
…people involved in winding down AHM’s affairs say that neither the contents of the boxes or the database have been audited, and that it’s possible the boxes still contain crucial documents such a promissory notes. Investors must have the original promissory notes, not copies, to be able to foreclose.