It is most likely that they lost the mortgage because the note would be recorded. The lender can still sue on the note but it is better to foreclose on the mortgage than the note. But this is the best time to see what you can negotiate with the bank via a modification for repayment plan to stay in the house.

Good luck!

Sounds like until the lender can produce the note, the lender cannot complete the foreclosure. Good luck in holding on to your home, if that is the end you are seeking.

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