Quote: Old adage, if there is no Note (discharged), there is no lien. (Security Instrument securing what no longer exists), how can that be?
Texas, it is not really quite that simple. For centuries, the law and the courts have distinguished between the obligation of the debt and the obligation of the note. While it is absolutely true that the note is typically the written evidence of the debt and the holder of the note is usually entitled to enforce the debt, this is not universally true.
A discharge of the obligation under a note without an actual accompanying discharge of the debt itself does not absolve a borrower of the obligation to repay the debt. What is discharged is the personal obligation to repay the note.
What remains is the obligation to repay the debt to discharge the lien.
The lien is discharged by the repayment of the debt or the discharge of the debt. It is not discharged by the discharge of the note.
There are a variety of ancient cases that also exemplify this distinction. Many of these arise in respect of questions about the right to enforce a note where the right of enforcement to the mortgage did not follow the note.
So often, both pro se litigants and dilettante lawyers seize upon the simple cases and pronouncements, for example the general rule that the equitable right to enforce the lien automatically follows the note through negotiation. But there are nuances and well established exceptions, particularly in respect of the effects and enforcement of the recording acts.
For example, what should happen when A is the maker of a note to B and the grantor of a mortgage to B, but B then separates the note and mortgage?
While there are many cases suggesting that the note and the mortgage are inseparable, there are also cases expressly showing otherwise!
Suppose that B, the the hold of A's note and the mortgagee under A's mortgage next sells A's note to C, properly negotiating the original instrument, but withholds the original mortgage from C and fails to execute a written assignment of mortgage in favor of C. Further suppose that B is a swindler, not unlike Mike H. or others who troll this Forum seeking to victimize additional distressed borrowers.
Suppose that after the negotiation of the original note to C, B uses a copy of the note to forge an additional original of A's note. B now sells the forged note to D, obtaining full value for the note a second time.
D, being more thorough and businesslike that C, demands and receives both the original mortgage and a written assignment of mortgage which D promptly records.
Here, we are presented with a paradox. C is in possession and is the seemingly valid holder of A's note and would seem to have a valid right of enforcement of the note. C has the original note.
By contrast, D has a forgery of the note, but D has the original mortgage and a seemingly valid written assignment of the valid mortgage which has been properly recorded in the county records.
The UCC would seem to tell us that C has the right to enforce the original note. The recording acts would seem to tell us that only D has a valid right to enforce the mortgage security instrument.
But under your analysis, Texas, since D has no valid note, D cannot possibly have an enforceable interest in the debt. Since D holds only a forgery uttered by B, D would seem to have no interest in the debt whatsoever.
Common sense and cases teach us otherwise.
Under the example shown, both C and D have been defrauded by B, but in different ways. But D is more conspicuously the innocent purchaser since C could have protected and secured his lien by insisting on (a) the delivery of the original mortgage security instrument and (b) obtaining and recording a written assignment of mortgage.
As long as D purchased without notice of C's claim and was truly blameless in the transaction, D will probably be found to have the only valid right to enforce the mortgage. D's claim in respect of the perfected mortgage assignment will be found to be superior to C's claim in respect of the valid note!
Once again, swindler Mike H. is putting forth blatantly false information in his quest for new marks for his swindles.