Court decides documents needed for foreclosure

North Carolina's Supreme Court recently heard a case to determine whether mortgage lenders should be required to produce original documentation on defaulted loans in order to foreclose on a property. The court case is one of many being disputed throughout the country as more evidence of foreclosure mishandlings by major U.S. banks is being uncovered.

Previously discovered problems with forelcosure activity include missing documents, robo-signing activity and inaccurate paperwork of overdue mortgage debts, Bloomberg reported. Attorneys for Wells Fargo and a Duplin County homeowner were heard at the trial.

The homeowner claims her $50,000 home loan was transferred to a series of secondary financial companies, and she is demanding the bank produce documentation proving she owed money on her mortgage to justify the foreclosure. The news source reported that Wells Fargo's attorney argued the case should be sent back down from the Supreme Court and the bank will produce the documents at that point.

While many banks are on trial for foreclosure practices, other lenders are working with U.S. officials to develop a new mortgage refinancing plan to help more homeowners take advantage of the low interest rates and avoid further foreclosures. The Wall Street Journal reported that the plan aims to aid homeowners whose home equity has dropped below what they owe on their mortgages, which prevents them from qualifying for refinancing. 

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