Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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HungarianProse
Can a stolen or lost Note be assigned?   Bank  A claims that it lost the Note and now is assigning the lost note to a new entity. It can't be delivered or even endorsed by the Bank A because it has no possession of it.
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HungarianProse

ARTICLE: Extending Enforcement Rights to Assignees of Lost, Destroyed, or Stolen Negotiable Instruments Under U.C.C. Article 3: A Proposal for Reform

November, 2001

50 Kan. L. Rev. 111

Author

Timothy R. Zinnecker*

Excerpt



I. Introduction



The trade volume for promissory notes is significant. 1 As trade terms are negotiated, the seller may discover that the original note has been lost, destroyed, or stolen. The absence of the note itself may limit, but not destroy, the marketability of the indebtedness that the note evidenced. By agreeing to indemnify a potential buyer against competing claims to the missing note, the seller may find a party willing to purchase the debt. But will lack of possession prevent the purchaser from enforcing the instrument?



The missing note may be a "negotiable instrument" governed by Article 3 of the Uniform Commercial Code ("U.C.C." or "Code"). 2 A party that may enforce an instrument is known, appropriately, as a "person entitled to enforce," a term carefully defined in section 3-301. The term acknowledges the possibility that instruments may be lost, destroyed, or stolen by extending enforcement rights to "a person not in possession of the instrument who is entitled to enforce the instrument" under section 3-309. 3 Section 3-309, entitled "Enforcement of Lost, Destroyed, or Stolen Instrument," permits a party to enforce a missing instrument if "the person was in possession of the instrument and entitled to enforce it when loss of possession occurred." 4 This language prohibits enforcement of a lost, stolen, or destroyed instrument by a party that never possessed the instrument.

Does anybody has access to this article?
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John Lewis

http://www.law.fsu.edu/faculty/2003-2004workshops/zinnecker.pdf

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Bill
HungarianProse wrote:
Can a stolen or lost Note be assigned?   Bank  A claims that it lost the Note and now is assigning the lost note to a new entity. It can't be delivered or even endorsed by the Bank A because it has no possession of it.

You ask a more complicated question than you think.  It really depends on the exact facts in your case.  

I think this decision explains it the clearest.

State Street Bank and Trust Co. v. Lord, 851 So. 2d 790 - Fla: Dist. Court of Appeals, 4th Dist. 2003



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The issue on appeal is whether a mortgagee by assignment, State Street Bank, may pursue a mortgage foreclosure in the absence of proof that either the mortgagee, or its assignor, ever had possession of the missing promissory note. A summary judgment was entered in favor of the mortgagor, Hartley Lord. We affirm.

The trial court correctly concluded that as State Street never had actual or constructive possession of the promissory note, State Street could not, as a matter of law, maintain a cause of action to enforce the note or foreclose the mortgage. The right to enforce the lost instrument was not properly assigned where neither State Street nor its predecessor in interest possessed the note and did not otherwise satisfy the requirements of section 673.3091, Florida Statutes, at the time of the assignment. See Slizyk v. Smilack, 825 So.2d 428, 430 (Fla. 4th DCA 2002).

To maintain a mortgage foreclosure, the plaintiff must either present the original promissory note or give a satisfactory explanation for its failure to do so. § 90.953(1), Fla. Stat. (2002);W.H. Downing v. First Nat'l Bank of Lake City, 81 So.2d 486 (Fla.1955)Nat'l Loan Investors, L.P. v. Joymar Assocs., 767 So.2d 549, 551 (Fla. 3d DCA 2000). A limited exception applies for lost, destroyed, or stolen instruments, where it is shown that "the person was in possession of the instrument and entitled to enforce it when loss of possession occurred." § 673.3091, Fla. Stat. (2002).


Here, it is unrefuted that State Street was unable to meet the requirement of section 673.3091. The undisputed facts show that the note was lost before the assignment to State Street was made. This court has previously refused to allow a mortgage foreclosure under similar circumstances. In Mason v. Rubin, 727 So.2d 283 (Fla. 4th DCA 1999), the appellant brought a foreclosure action on a second mortgage, the trial court denied the foreclosure, and this court affirmed on the basis that the appellant had failed to establish the lost note under section 673.3091. Likewise, here, where State Street failed to comply with section 673.3091, the trial court correctly entered summary judgment denying its foreclosure claim.[1]

State Street cannot succeed under an assignment theory. We recognize that this court, and the Third District, have held that the right of enforcement of a lost note can be assigned. SeeSlizyk, 825 So.2d at 430Deakter v. Menendez, 830 So.2d 124 (Fla. 3d DCA 2002)Nat'l Loan,767 So.2d at 551. Here, however, in contrast to National Loan, Slizyk, and Deakter, there is no evidence as to who possessed the note when it was lost.


I think this case covers all the bases (because you are in FL).  If you carefully read this decision (decided in favor of the homeowner) you should be able to apply the facts in your case and assertain IF they can transfer the right to a lost note or not.  It is a pretty clear decision.  
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Chuck

The article seems to answer your question.  But I think that you are also asking the wrong question.

 

There is a distinction between ownership and holdership.  Ownership can be altered by contract or written assignment.  Holdership is altered through negotiation which requires indorsement and delivery.

 

The holder has the right of enforcement.

 

I could sell you my lost or stolen car.  You might pay for it.  You might own it.  But I will have difficulty delivering it to you, because it is lost or stolen.

 

If I sold you a lost or stolen car and didn't tell you that it was lost or stolen, then that would probably be fraud or, at best, might reflect an incomplete contract (if the sale contemplated actual delivery of the car).

 

If I told you that the car was lost or stolen and offered to sell it to you, with you assuming the risk as to any possible recovery, this would probably be a valid contract.  By identifying the car as lost or stolen and shifting the risk of recovery to YOU, you would be buying the car, though you might never see it.  (I might sign the title over to you, etc.)  You have the title, but no car.

 

When you ask if a lost note can be assigned, the answer is probably YES.  If you ask if a lost note can be negotiated or transferred in accordance with the UCC, the answer is almost certainly NO, as either negotiation or transfer contemplates delivery of the instrument.

 

I presume that you would not pay me full market value for my lost or stolen car (unless it was already safely parked in your garage because you stole it)!  I would be skeptical that a financial institution would pay full value for a note that was lost or stolen.  (Bear in mind that the note indorsed in blank is a bearer instrument and even a thief is usually entitled to enforce it!  Thus the thief of a promissory note is usually in a vastly superior position to an auto thief.)

 

The right of enforcement stalls in the last holder before loss of the instrument.  The owner of the instrument could still sell the instrument, but the buyer wouldn't be entitled to enforcement unless the instrument was found.  The last holder might still act as a bailee though for the new owner and the last holder could bring an action to enforce the instrument and then bestow the proceeds on the purchaser.

 

A purchaser would do well to carefully consider the risks associated with such a transaction and should insist on a nice discount!

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Bill

John, 

I think this is an excellent article.  I am in fact saving it because I have seen many good examples where these articles are referenced in decisions in my jurisdiction.  I do think this is NOT much help to HungarianProse because it is a very LONG general article from 10 years ago.  It is also a "proposal for reform" rather than an explanation.   He needs something to apply to FL.  I am very disappointed that he has been here for some time but has not learned to at least do a quick search to find simple answers.  

HungarianProse

You really need to read the post by Mr. Roper on low cost ways to do legal 
research.  While I don't mind taking 30 seconds to find the answer to your 
question, I am concerned that with an answer so easily obtained for FREE you
are doing very little research on your own.  You need to do in-depth research
on ALL of your defenses, arguments, pleadings, motions, procedures, ect.

Here is the link to the google scholar search I just did.


You can easily change the search terms to find cases that will provide the answer to a lot of common questions.  I would NOT trust this enough to pull up all the cases needed.  
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John Lewis
HungarianProse, I too agree with Bill's assessment that "with an answer so easily obtained for FREE you are doing very little research on your own", because like Bill all i did was read your request ~highlighted the 'Article..' right clicked on "do goggle search' and bam your article appeared!

Remember when your in front of that judge and he asks you a question there is not "msfraud" to go to" and this is the reason that you must consider Bill's advice " You need to do in-depth research
in ALL of your defenses, arguments, pleadings, motions, procedures, ect."

so that when you are in front of that judge and he asks you to defend your position you can unequivocally state re the lost note:....Your Honor the Court in State Street....sez this and you must follow their ruling!

ps make sure you have copies of all the cases you plan to cite and be ready to hand one to the court as well as one to the fraudster lawyer.

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John Lewis
HungarianProse ur Assignment:

perform a search for the following terms: ownership holdership right of enforcement ... using "search" feature/button on this site" ... there is one really excellant thread that just might interest you. 
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t

Quote:

The article seems to answer your question. But I think that you are also asking the wrong question.

There is a distinction between ownership and holdership. Ownership can be altered by contract or written assignment. Holdership is altered through negotiation which requires indorsement and delivery.

The holder has the right of enforcement.

I could sell you my lost or stolen car. You might pay for it. You might own it. But I will have difficulty delivering it to you, because it is lost or stolen.

If I sold you a lost or stolen car and didn't tell you that it was lost or stolen, then that would probably be fraud or, at best, might reflect an incomplete contract (if the sale contemplated actual delivery of the car).

If I told you that the car was lost or stolen and offered to sell it to you, with you assuming the risk as to any possible recovery, this would probably be a valid contract. By identifying the car as lost or stolen and shifting the risk of recovery to YOU, you would be buying the car, though you might never see it. (I might sign the title over to you, etc.) You have the title, but no car.

When you ask if a lost note can be assigned, the answer is probably YES. If you ask if a lost note can be negotiated or transferred in accordance with the UCC, the answer is almost certainly NO, as either negotiation or transfer contemplates delivery of the instrument.

I presume that you would not pay me full market value for my lost or stolen car (unless it was already safely parked in your garage because you stole it)! I would be skeptical that a financial institution would pay full value for a note that was lost or stolen. (Bear in mind that the note indorsed in blank is a bearer instrument and even a thief is usually entitled to enforce it! Thus the thief of a promissory note is usually in a vastly superior position to an auto thief.)

The right of enforcement stalls in the last holder before loss of the instrument. The owner of the instrument could still sell the instrument, but the buyer wouldn't be entitled to enforcement unless the instrument was found. The last holder might still act as a bailee though for the new owner and the last holder could bring an action to enforce the instrument and then bestow the proceeds on the purchaser.

A purchaser would do well to carefully consider the risks associated with such a transaction and should insist on a nice discount!

 

Well, said, Chuck!  Excellent post!!

 

Texas, care to comment?

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