Thanks for the insight. Securitized notes seem to be an odd beast. Looking through Arizona cases regarding enforcement of notes secured by single family homes, rarely, if ever, so I see references by the Plaintiff (or Defendant) to the Uniform Commerical Code. Arizona Revised States Title 47 et. seq. is a restatement of the U.C.C. I have been perplexed at so little use of the U.C.C. regarding residential note enforcement.
I looked up the ARS Title 47 section that defines a nogotiable instrument. Here is the verbiage: (More comments follow)
47-3104. Negotiable instrument
A. Except as provided in subsections C and D, "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:
1. Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
2. Is payable on demand or at a definite time; and
3. Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain:
(a) An undertaking or power to give, maintain or protect collateral to secure payment;
(b) An authorization or power to the holder to confess judgment or realize on or dispose of collateral; or
(c) A waiver of the benefit of any law intended for the advantage or protection of an obligor.
B. "Instrument" means a negotiable instrument.
C. An order that meets all of the requirements of subsection A, except paragraph 1, and otherwise falls within the definition of "check" in subsection F is a negotiable instrument and a check.
D. A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this chapter.
E. An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft", a person entitled to enforce the instrument may treat it as either.
F. "Check" means:
1. A draft, other than a documentary draft, payable on demand and drawn on a bank; or
2. A cashier's check or teller's check.
An instrument may be a check even though it is described on its face by another term, such as "money order".
G. "Cashier's check" means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.
H. "Teller's check" means a draft drawn by a bank:
1. On another bank; or
2. Payable at or through a bank.
I. "Traveler's check" means an instrument that:
1. Is payable on demand;
2. Is drawn on or payable at or through a bank;
3. Is designated by the term "traveler's check" or by a substantially similar term; and
4. Requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.J. "Certificate of deposit" means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.
I can only presume that mortgage lenders don't want to see the large body of law surrounding the U.C.C. to get into their cases. That's just a guess on my part.
If a person was to look at ARS Title 47 for guidance on the statute of limitations upon when an action can be brought to enforce a note, the rules are six (6) years after acceleration, or, when the past payment was made.
However, as is being discussed here, a Note left after a Quiet Title Judgment appears to be unsecured. An interesing hypothesis would be a homeowner who fits the scenario discussed herein, who, after perfecting Quiet Title and obtaining Title Insurance to make the title marketable, obtains a NEW mortgage - hopefully close to the entire value of the home. It seems to me the new secured note stands ahead of the old unsecured note, as least as it concerns use of the home as collateral for the NEW note. The unsecured note holder is placed into the position of fighting the new secured note holder. Where's that Red Kryptonite when you need it?
The conumdrum for holders of securitzed notes is how do they enforce an unsecured note? The note is literally owned by hundreds or thousands of bond holders. I don't have a good handle on REIT laws but it would seem the note would have to be OUT of the trust before it could be enforced. Most of the REIT aagreements I have seen don't allow individual certificate holders to sue on behalf or the REIT, or, if they can sue, the certificate holders must meet some huge hurdle regarding the holders coming together as a large group and indemnifying the Trustee (as well as paying the expenses of the suit). The certificate holders suing as a group opens an even larger can of worms. They would either have to sue as individuals, a names group, or as the Trust. Suing as the Trust would be perfect as that would allow you to attack the actual Trust. I can not imagine any lawyer dumb enough to advise a bankruptcy remote Trust to open its pants as a Plaintiff.
I leave everyone with this thought. Let's say Smith obtains Quiet Title, all of the facts mentioned above (the 'scenario') are taken as true, and, most importantly the cancellation of acceleration, default, etc. are known to all actors; YET, the Trustee reports the Note as 'performing' to the certificate holders notwithstanding no payments received and title no longer vesting in the name of the Trust. Securities fraud???
My head is spinning on my neck and my dogs look at me funny as I speak in tongues...!