California Court Holds That HELOCS Are Not Negotiable Instruments Under the UCC


California Court Holds That HELOCS Are Not Negotiable Instruments Under the UCC

California Court Holds That HELOCS Are Not Negotiable Instruments Under the UCC

H/T Reader of this Site –

“Financial institutions securitized billions in Home Equity Lines of Credit (HELOC). These same institutions argue in courts across the country that HELOCs are negotiable instruments under the Uniform Commercial Code, and therefore, the banks do not have to prove ownership of the debt, rather merely possession; “Even if we stole the HELOC, we have the right to enforce it under the Uniform Commercial Code, because we have possession of the original instrument.” A California Court disagreed, and in considering a borrower’s motion for summary adjudication, held that HELOCs are not payable for a fixed sum and are therefore not negotiable instruments; a ruling that helps pave the way to force banks to prove ownership of billions of dollars in HELOCs under contract law.

“The HELOC Is Not a Negotiable Instrument

Section 104.3104 of Nevada’s Uniform Commercial Code provides that, among other things, “‘negotiable instrument’ means an unconditional promise or order to pay a fixed amount of money.” Nev. Rev. Stat. Ann. § 104.3104(1). Neither of the parties has cited to any Nevada authorities dealing with the issue of whether a note evidencing a line of credit qualifies as a Courts applying other states’ versions of UCC § 3-104 have held that lines of credit or revolving loans are not negotiable instruments as they fail the “fixed amount” requirement. Am First Fed. v. Gordon, 2015 WL 3798210 (Conn. Super. Ct. May 26, 2015); Heritage Bank v.Bruha, 812 N.W.2d 260 (2012); Yin v. Society Nat’l Bank Ind., 665 N.E.2d 58 (1996); Resolution Trust Corp. v. Oaks Apts. Joint Venture, 966 F.2d 995 (5th Cir. 1992); Cadle Co. v. Richardson, 597 So. 2d 1052 (1992). Under the terms of the HELOC, the obligee promises to lend Baroni money “from time to time” upon her request, up to a credit limit of $134,998.00, and Baroni promises to pay “when and as due, all loans made under this Agreement” pursuant to periodic monthly statements. The HELOC, however, does not state “a fixed amount of money” that Baroni is required to pay and the revolving nature of the agreement demonstrates Baroni would owe different amounts at different points in time depending upon her requests for loans and payments on account of those loans. Therefore, the HELOC does not qualify as a negotiable instrument within the meaning of section 104.3104.2 Because the HELOC is not a negotiable instrument, section 104.3205 does not apply to the HELOC. Nev. Rev. Stat. § 104.3205.”

MSJ Motion by DinSFLA on Scribd

Order Granting in Part Denying in Part Msj by DinSFLA on Scribd

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2 Responses to “California Court Holds That HELOCS Are Not Negotiable Instruments Under the UCC”

  1. “Kareem_Salessi_11-9-17”
    “Salessi Weapons of Mass-Disclosure” (“Salessi WMD”)

    At least seven years ago (2010), I had personally documented these facts about HELOC in my Chapter-11 court documents, and have posted some of them in my “Salessi Litigation Page” linked above.
    However, due to the fact that the corrupt BK “Judge Erithe E. Smith” had been evidently bribed by “Attorney Martin Phillips”, on behalf of “Wells Fargo Drug Cartel”, Judge Smith did not follow the laws on the books, but followed the apparent bribe money.
    Upon complaining of the said corruptions to the 9th Circuit, and its apparent confirmed findings of my proofs against Judge Smith, the 9th Circuit dismissed my complaint against her and allowed her to enlarge her corruptions to thousands of more victims, most likely in return for thousands of more bribes, as I had previously quoted from the Hon. “Judge Dale Chase” (retired) who had blown the whistle on foreclosure judges being bribed with 10% of the initial amount of the note.

    The 9th Circuit had been taking many months on my complaint, may be even a whole year! Therefore, I wrote to the 9th Circuit, that if they wanted to stop spending any more time investigating my complaint, and if feasible, I could withdraw my complaint if they could order Judge Smith to vacate her illegal rulings in my case.
    The dumping of my complaint against Judge Smith occurred immediately thereafter!

    Related comment:

    The follow up comment to the above comment, which was an extensive whistle-blow, was unfortunately not posted!

    thank you for posting this comment.
    “Kareem Salessi 11/9/17”

  2. Below is my directly related comment to this HELOC discussion:

    Thank you.


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