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Mortgages and the UCC

Mortgages and the UCC


Think this applies to MERS after you read this case from the 1800’s? Carpenter v. Longan, 83 US 271 – Sup. Court | The note and mtg are inseparable…ASMNT of the note carries the mtg with it, while an ASMNT of the latter alone is a nullity.

Baker, Donelson, Bearman, Caldwell & Berkowitz, PC-

Who is entitled to enforce a mortgage note?

How can the owner of a note effectively transfer ownership?

What is the effect of such a transfer?

May an assignee who has not obtained a recordable assignment of a secured interest in the mortgaged property take steps to become the assignee of record?

While you might expect that these questions would have a different answer in each state, the Permanent Editorial Board (PEB) for the Uniform Commercial Code sought to answer these questions for the nation as a whole in a report it issued on November 14, 2011.

While acknowledging that foreclosure law is largely the province of the states, the board declared nevertheless that the UCC is relevant under state law and, further, that “legal determinations made pursuant to the […] Report will, in many cases, be central to the administration of [state foreclosure] law.” Report, pp. 1 & 14.  The board therefore issued the report with the stated intent to further a more consistent, nationwide application of the UCC principles to state real property law in an era when “not all courts and attorneys are familiar with them.” Report, p. 1.

The UCC is a model code sponsored by the American Law Institute and the Uniform Law Commission that governs commercial transactions and has been enacted, in one form or another, in each of the 50 states.  Generally, Articles 3 and 9 of the UCC are relevant to mortgage loans. If the note is considered a negotiable instrument, Article 3 provides rules governing both the obligations of parties to a note as well as enforcement of those obligations. Article 9 governs the transfer of notes, whether the note is a negotiable instrument or not. The UCC constitutes enforceable law in each state only to the extent that it has been adopted by the state legislature.

Who is entitled to enforce a mortgage note?

Continue reading …[Baker, Donelson, Bearman, Caldwell & Berkowitz, PC]

Copy of the Permanent Editorial Board (PEB) for the Uniform Commercial Code is below but please read the link above first:

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Adam Levitin | The Heirs of Karl Lleywellyn: the PEB Report, Green Cheese, and the Hijacking of American Law

Adam Levitin | The Heirs of Karl Lleywellyn: the PEB Report, Green Cheese, and the Hijacking of American Law


Prof. Adam Levitin –

This last week the Permanent Editorial Board of the Uniform Commercial Code came out with a report bering the none-too-thrilling title of “Report on Application of the Uniform Commercial Code to Selected Issues Related to Mortgage Notes“. There’s an awful lot to say about this awful document, and I’m not going to attempt to cover it all in a single blog post. This post is going to cover what the report is, what authority it has, and why it is completely irrelevant (namely that it deals with negotiable notes, when virtually all mortgage notes are non-negotiable). Subsequent posts will deal with the substantive flaws in the report and with the motivation behind the report and with the way the uniform law making process has become completely hijacked by monied interests.

[PART 1]

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[PART 2]

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[PART 3]

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© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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APPLICATION OF THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES

APPLICATION OF THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES


Via: Max Gardner’s Boot Camp

The report specifically indicates that “It should not be assumed that all mortgage notes are negotiable instruments” and  affirms that the requirements of  section 3-104 must be met in order for a particular mortgage note to be considered a negotiable instrument.

(If you’re not registered for the UCC seminar yet, there is space available:  get more information or register now!)

Introduction

Recent economic developments have brought to the forefront complex legal issues about the enforcement and collection of mortgage debt. Many of these issues are governed by local real property law and local rules of foreclosure procedure, but others are addressed in a uniform way throughout the United States by provisions of the Uniform Commercial Code (UCC).1 Although the UCC provisions are settled law, it has become apparent that not all courts and attorneys are familiar with them. In addition, the complexity of some of the rules has proved daunting.

The Permanent Editorial Board for the Uniform Commercial Code2 has prepared this Report in order to further the understanding of this statutory background by identifying and explaining several key rules in the UCC that govern the transfer and enforcement of notes secured by a mortgage3 on real property. The UCC, of course, does not resolve all issues in this field. Most particularly, as to both substance and procedure, the enforcement of real estate mortgages by foreclosure is primarily the province of a state’s real property law (although determinations made pursuant to the UCC are typically relevant under that law). Accordingly, this Report should be understood as providing guidance only as to the issues the Report addresses.4

Please click image for paper

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Draft Report of the PEB on the UCC Rules Applicable to the Assignment of Mortgage Notes and to the Ownership and Enforcement of Those Notes and the Mortgages Securing Them

Draft Report of the PEB on the UCC Rules Applicable to the Assignment of Mortgage Notes and to the Ownership and Enforcement of Those Notes and the Mortgages Securing Them


This Draft was mentioned in the [IN RE VEAL]

On March 29, 2011, the PEB released for public comment its Draft Report on UCC Rules Applicable to the Assignment of Mortgage Notes and to the Ownership and Enforcement of Those Notes and the Mortgages Securing Them. The PEB is now reviewing the comments received by the submission deadline of May 28, 2011.

From: John A. Sebert, Chair, Permanent Editorial Board for the Uniform Commercial Code (PEB)

Summary

The Uniform Commercial Code provides four sets of rules that determine matters that are important in the context of enforcement of mortgage notes and the mortgages that secure them:

  • First, in the case of a mortgage note that is a negotiable instrument, Article 3 of the UCC determines the identity of the person who is entitled to enforce the note and to whom the maker owes its payment obligation; payment to the person entitled to enforce the note discharges the maker’s obligation, but failure to pay that party when the note is due constitutes dishonor.
  • Second, for both negotiable and non-negotiable mortgage notes, Article 9 of the UCC determines whether a transferee of the note from its owner has obtained an attached property right in the note.
  • Third, Article 9 of the UCC provides that a transferee of a mortgage note whose property right in the note has attached also automatically has an attached property right in the mortgage that secures the note.
  • Finally, Article 9 of the UCC provides a mechanism by which the owner of a note and the mortgage securing it may, upon default of the maker of the note, record its interest in the mortgage in the realty records in order to conduct a non-judicial foreclosure.

[ipaper docId=58135658 access_key=key-1k731amd1w9ox5m5gxre height=600 width=600 /]

Source: The American Law Institue and The National Conference of Commissioners on Uniform State Laws

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Kenneth Eric Trent, www.ForeclosureDestroyer.com

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