Quote: kelly saidin a foreclosure action-does the "keeper of the document" have the authority to begin foreclosure action if the plaintiff is out of business? i thought it had to be "keeper of the record" and that the company that went out of business had to provide written authorization that-like a POA to the keeper of the record..any thoughts would be welcome
First, let me preface my remarks by pointing out that I am NOT an attorney and this is NOT legal advice, but rather a discussion amongst fellow pro se litigants. You are encouraged to critically investigate my post, to do independent research and to consult with a licensed attorney.
You are muddling two different legal concepts. One of these pertains to the holder of a mortgage. The other pertains to evidentiary matters, an exception to the hearsay rule, pertaining to a custodian of business records.
Owner or Holder
Generally, the commerical law which controls a suit on a promissory note derives from something called the Uniform Commerical Code (UCC). The UCC is state rather than Federal law. It is called the Uniform Commercial Code because state legislatures throughout the country have adopted most elements of the UCC in a fairly uniform way throughout the country, but this is not universally the case. That is, some states have some minor variations of the UCC. The existence of the UCC helps to promote commerce by giving our country a uniform commercial framework for certain types of transactions.
Under the UCC, usually either an owner or a holder has the right to enforce an instrument. Often, both ownership and holdership are vested in the same entity. But there are a variety of common situations where this is not the case.
For example, at the very inception of a mortgage loan, the loan proceeds actually usually derive from (are funded by) a so called warehousing lender. The warehousing lender offers mortgage companies a credit line, not at all unlike a home equity credit line which can be drawn down and paid back by the mortgage lender. In the case of a warehousing credit line, the mortgage lender faces restrictive covenants in the loan which restrict borrowing to the purpose of funding loans. And the mortgage lender pledges these mortgage loans, once actually made, as collateral for the warehousing loan. Covenants of the warehousing line require the indorsement and delivery of the newly executed promissory note to the warehousing lender often within 72 hours of closing.
Note that the loan is NOT being sold to the warehousing lender. It is simply security for the warehousing loan.
In this instance, the originating Lender is and remains the owner of the loan. The warehousing lender, through negotiation, becomes the holder of the loan. Under the facts described, each would have an independent right of enforcement under the UCC.
This is further muddled though through the use of so-called instiutional custodians. The institutional custodians specialize in safeguarding and protecting mortgage instruments. Very often, both the warehousing lender and the instiutional mortgage investor use instituional custodians. This can cloud holdership, though clarity can be restored by obtianing the promissory note -- the negotiable instrument -- from the vaults of the institutional custodian.
The Business Records Exception To the Hearsay Rule
The hearsay rule is a rule of evidence, again adopted and separately implemented by statute or Rules of court in most states. The principle underlying the hearsay rule is that only those persons with actual personal knowledge of a matter are permitted to testify as to the truth of a matter.
That is, if I know something because I personally witnessed it and perceived it through my own senses, this is different than if I know something because someone else told me that it was the case. Even if the person who told me is generally trustworthy and reliable, one problem presented by hearsay testimony is that the hearsay witness cannot really be effectively cross-examined as to details of the event. I simply didn't see it or personally witness it.
The business records exception to the hearsay rule basically says that business records, created contempoaneously to the event, and in the ordinary course of business can be directly admitted into evidence, as long as these are authenticated by some foundation witness who is a custodian of that firm's business records.
However, I should note here that the mortgage foreclosure mills have been riding roughshod over the evidentiary standards and routinely obtain perjured evidence from various corporate affiants -- contract perjrers in many cases -- by having those who lack any personal knowledge make sworn statements avering that they do have such knowledge. This is simply illegal and creates perjured evidence through false affidavits.
When a Lender Goes Out of Business and Becomes Extinct
The situation you present with an originating Lender which went out of business provides a variety of issues which require application of each rule. And there are a LOT of factual details which will control the outcome.
Most of the original Lenders have sold the mortgage loan within about sixty to ninety days of origination. And when the loan is properly sold and negotiated through indorsement and delivery, the buyer becomes both the owner and the holder of the mortgage indebtedness and would have a right of enfocement.
But there is a proof problem here. That is to say, simply because a plaintiff shows up and claims that it is the owner and the holder, this does not make it so. As you are seeing from the news, affidavits are being falsely created by robo-signers, being perjured, and presented as evidence. Often, a mortgage servicer, an agent of the mortgage investor, is alleging that it is the owner or the holder, when it is usually neither.
A servicer might become the holder by obtaining the promissory note from the institutional custodian for the mortgage investor. But this would usually need to be done in advance of the suit, and very often this has not been properly done.
Separately, the facts about which business records have been properly authenticated and admitted into evidence can be clouded by a Lender which fails and goes out of business.
If the originating Lender has gone Bankrupt, gone out of business, surrendered its corporate charter and become extinct, this also presents some legal issues and factual questions pertaining to the validity of the negotiation of the promissory note -- the indorsement and delivery thereof.
One addiitonal cautionary note is in order. Servicers and the contract forgers and perjurers they employ very often forge an assignment which makes it appear as if the plaintiff is the owner or holder. One key CLUE that a document is a forgery is when the grantor is an entity which went out of business -- became extinct -- before the date of excution of the forged instrument. Taking special note of the date that an entity went out of business can help you prove the fact of the forgery!
Quote: arkygirl saidI assume your note was securitized, digitized and sold. The Trustee is never the owner in that case, but they are supposed to hold the original documents for the investors. [emphasis added]
Arkygirl is an ardent and passionate participnt of this Forum. But very often she posts legally erroneous information. She is always certain, but only sometimes right.
Her assertion that the trustee of a mortgage trust is never the owner of mortgage loans is simply absurd. This sort of incoherent drivel is the kind of nonsense, which, when repeated in court by an unsophisticated pro se litigant, will eviscerate your credibility with the judge and cause the loss of your home. BEWARE.
A trustee of a trust IS usually the legal owner of that trust's assets. In the case of an institutional mortgage trust, the trustee would typically be the owner and the institutional custodian would typically be the holder of the mortgage loans, though the trusts assert that the loans are being held for their benefit.
This is NOT to say that one should simply ASSUME that a particular trust is the owner or the holder. This needs to be PROVEN by valid admissible evidence.