Quote: Sandy said:
Does this ownership or control require physical possession of the original note or certified "true" copy before filing the complaint? In my case, the servicer, so-called owner/holder of the note, filed the complaint, then two months later stated that it was waiting to get the original note. Now over three months passed.
As always, you present some excellent questions!
Re-read the decision and carefully re-read UCC § 3-301 "Person Entitled To Enforce Instrument":
One thing that emerges from a careful reading of the UCC, is that ownership of the instrument is not central to the right to enforce. Except in the case of a lost instrument, the issue reduces to holdership and/or possession.
When the servicer states that it is waiting to get the note, the real reason is typically that the note is in the physical custody of an institutional custodian. Amongst the various responsibilities in securitization, the task of physically holding and safeguarding the mortgage collateral is vested in such an institutional custodian.
The servicers and mortgage investors seek to CLAIM that since the institutional custodian is the agent of the mortgage investor and that the investor is holding the collateral as a fiduciary for the benefit of the investor that custody by the institutional custodian can be ascribed to the investor. But I am aware of NO CASE supporting this holding.
And to the contrary, consider the rather common commercial practice which takes place immediately following origination which I have explained elsewhere as to the delivery of the instruments indorsed in blank to the warehousing lender (or to the institutional custodian acting on the warehousing lender's behalf). In this case, the originating lender continues to own the negotiable instrument, but the instrument is both pledged and physically delivered to the warehousing lender as collateral for the warehousing loan.
While the originating lender continues to own the loan, the right of enforcement passes to the new holder, the warehosuing lender.
The idea that somehow that the mortgage investor retains a right of enforcement of an instrument of which it lacks physical custody, seems to me to be wrongheaded. Since the institutional custodian is the agent of the mortgage investor, the investor can simply request the RETURN of the instrument. Prior to return, the institutional custodian is the holder. After return, the mortgage investor becomes the holder.
The mortgage servicers want to continue to engage in egregious discovery abuse evading and refusing to answer questions relating to the timing and the chain of custody of ownership. And instead of producing the underlying original documents of the securitization, as well as custodial receipts which might memorialize the physical delivery of the negotiable instruments, they instead prefer to forge assignments which are being fabricated solely for use as false evidence in foreclosure cases.
One problem for the mortgage investors in actually producing the valid custodial receipts is that these are usually going to show that the negotiable instrument was still in the vaults of the institutional custodian at the commencement of the suit.
This creates a bit of a paradox. The plaintiff might have had standing in having an economic interest in the underlying loan, but is expressly lacking in standing due to the statutory provisions of the UCC which vest right of enforcement in the holder rather than the owner.
Because of the carelessness and the fraudulent business practices of the servicers and the foreclosure mills they employ this is a defect in almost every foreclosure case brought in the United States for more than a decade!
Many other foreclosure defense activists believe that there were defects in the securitization of the loan. In my view, this is a false paradigm. I think that the mortgage investors mostly have a valid ownership interest in the loans. But the instruments sit in the vaults of a separate institutional custodian. And the mortgage servicers are routinely initiating foreclosures without physically obtaining the original instrument from the custodian. As such ALL allegations that the plaintiff is the holder are UNTRUE.
They compound this problem by pleading into evidence a copy of the promissory note obtained from the servicer's imaging system which is very often UNINDORSED. This tends to undermine the plaintiff's case by seemingly proving lack of indorsement at commencement. Then the plaintiff has two problems, the evidence tends to prove that the note was unindorsed and they have NO EVIDENCE of delivery of the negotiable instrument.
If the plaintiff were to produce the REAL delivery receipt, it would show delivery to the institutional custodian rather than the trustee. If the plaintiff were to produce the REAL request for release of the promissory note and a delivery receipt showing delivery to the plaintiff's lawyer, it would show that the delivery was after commencement of the suit.