Dale A. Whitman: WHAT WE HAVE LEARNED FROM THE MORTGAGE CRISIS ABOUT TRANSFERRING MORTGAGE LOANS

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Dale A. Whitman: WHAT WE HAVE LEARNED FROM THE MORTGAGE CRISIS ABOUT TRANSFERRING MORTGAGE LOANS

Dale A. Whitman: WHAT WE HAVE LEARNED FROM THE MORTGAGE CRISIS ABOUT TRANSFERRING MORTGAGE LOANS

WHAT WE HAVE LEARNED
FROM THE MORTGAGE CRISIS
ABOUT TRANSFERRING MORTGAGE LOANS
Dale A. Whitman*

Editors’ Synopsis: The vast expansion of the secondary mortgage market posed great challenges to the legal principles governing the mortgage transfer system. Not only were parties not adhering to the rules set forth under the Uniform Commercial Code, but even some courts were conflating basic principles such as the difference between ownership and entitlement to enforce. This Article analyzes several critical legal principles of the transfer process, discusses what led to the system’s dysfunction during the mortgage crisis, while proposing a more userfriendly system for both lenders and borrowers.

I. INTRODUCTION
II. HOW MORTGAGES ARE TRANSFERRED
III. WHAT WE HAVE LEARNED: A SUMMARY

A. Ownership of the Note and Mortgage Must be
Distinguished from the Right of Enforcement
B. The Right to Enforce Negotiable Notes Can be Transferred
Only by Delivery
C. Negotiability Matters
D. The Mortgage Follows the Right to Enforce the Note
E. Note Endorsements are Helpful but Usually Not Essential
F. Mortgage Assignments are Irrelevant to the Right to
Foreclose by Judicial Proceeding
G. Many Nonjudicial Foreclosure Statutes are Weak and
Inadequate

IV. DETAILED EXAMINATION OF EACH OF THE PRINCIPLES

A. Ownership of the Note and Mortgage Must be Distinguished
from the Right of Enforcement
B. The Right to Enforce Negotiable Notes Can be Transferred
Only by Delivery
C. Negotiability Matters
D. The Mortgage Follows the Right to Enforce the Note
E. Note Endorsements are Helpful, but Usually Not Essential
1. The Use of an Allonge
2. Holder in Due Course
F. Mortgage Assignments are Irrelevant to the Right to
Foreclose by Judicial Proceeding
1. Mortgage Assignments as a Means of Gaining Notice
2. Recording an Assignment as a Tool to Prevent
Wrongful Satisfaction or Subordination by the
Original Mortgagee
G. Many Nonjudicial Foreclosure Statutes are Weak and
Inadequate
1. The Role of the Trustee under a Deed of Trust
2. Lost Notes in Nonjudicial Foreclosures

V. CONCLUSION

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One Response to “Dale A. Whitman: WHAT WE HAVE LEARNED FROM THE MORTGAGE CRISIS ABOUT TRANSFERRING MORTGAGE LOANS”

  1. Rock says:

    Most importantly, he pointed out that all of the legal incompetents have been ripping off homeowners, with useless arguments like “produce the note,” “MERS,” “assignment,” “securitization,” etc

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