About Wrongful Foreclosure

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Statutory Requirements for Establishing the Right to Enforce an Instrument

     Some research that may be of value.  Always validate new information.  After validation and comprehension of the information revealed below, please pass along the information to others who may be in jeopardy of losing their property for non-payment of mortgage installments.

References to the Uniform Commercial Code (UCC) are to the Federal UCC. Each state in the union, except Louisiana, has adopted the Federal UCC into its own law.  The Federal UCC can easily be cross referenced to your local jurisdiction.  When using the UCC in your jurisdiction, reference the version of the UCC adopted in that particular jurisdiction.

i.e.: UCC § 3-301  has been adopted in the Alabama Code at -- Ala.Code 1975, § 7-3-301.

The Cornell UCC state locator can be found here: LII: UCC - Locator

     Discovery is where the questions are asked about production of the original wet-ink NOTE.

     If the foreclosure claimant cannot produce the NOTE or a valid chain of custody in the form of valid assignments back to the holder of the NOTE, the case is over for lack of establishing the court's subject matter jurisdiction over the case.

    Present physical possession of the NOTE must be established pursuant the fact that if the NOTE is still in existence, and a party not the holder and without a valid assignment traceable in an unbroken chain of valid assignments back to the present holder, is awarded judgment against the mortgagor (you), at some time in the future the present holder of the original wet-ink NOTE could appear and file another lawsuit to enforce the NOTE.

 

     If you paid a lawyer to represent you in a foreclosure lawsuit where you were dispossessed of the property, and the lawyer failed to use the UCC to defeat the foreclosure claimant, that lawyer is incompetent and provided ineffective counsel.  A complaint against such lawyer should be lodged with his local bar association.  You might want to conduct an investigation to determine any conflict of interest between the lawyer and the bank.  Your lawyer was probably acting as a "shilling" for the bank. 

Legal Term: "shilling" Slang term for posing as an innocent bystander at a confidence game but giving aid and assistance to the perpetrators of the scheme as a decoy. Black's Law Dictionary, 6th Edition, p. 1377 (BLD6-1377)

     Subject matter jurisdiction can be challenged at any time. Even after judgment and execution.

     If the facts indicate that the foreclosure was wrongful pursuant to the court's lack of subject matter jurisdiction, the court's judgment in favor of the foreclosure claimant is voidable.
See Rules of Civil Procedure, Rule 60(b), (void judgment - lack of subject matter jurisdiction).

     The following research is the supporting statutory law in support of the demand "Show me the NOTE!"

     In light of the fact that virtually all promissory notes taken by banks, mortgage companies, etc., were sold at some time after the "closing" for the respective transactions --- without the right in discovery to physically inspect, and photocopy the original wet-ink instrument, (production of the original instrument), meaning that the bank, mortgage company, etc., retained physical possession of the NOTE, or can PROVE a valid assignment of the rights of the holder to enforce the instrument from the holder of the original wet-ink NOTE, standing in a court to enforce the instrument in foreclosure is impossible pursuant to the Uniform Commercial Code. (UCC).

     Without possession of the original wet-ink NOTE, or proof of authentic and valid assignment of the rights of the holder of the original wet-ink NOTE, no foreclosure action can be sustained when confronted with the following research.

If the bank is suing to enforce a NOTE and foreclose on property, if the bank sold (transferred) the NOTE, the bank lost the right to enforce the NOTE as a holder.
See UCC § 3-309(a)(2).

Access to UCC online: http://www.law.cornell.edu/ucc/ucc.table.html

 

Statutory Requirements for Establishing the Right to Enforce an Instrument

1.   Prove status of holder of the instrument. (UCC § 3-301(i)); or

  UCC § 1-201(21) "Holder" means:
  (A) the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession; or
  (B) the person in possession of a document of title if the goods are deliverable either to bearer or to the order of the person in possession.
    http://www.law.cornell.edu/ucc/1/article1.htm#s1-201

2. Prove status of non-holder in possession of the instrument who has the rights of a holder. (UCC § 3-301(ii)); or

3. Prove status of being entitled to enforce the instrument as a person not in possession of the instrument pursuant to UCC § 3-309 or UCC § 3-418(d). (NOTE is lost, stolen, destroyed).

UCC § 3-309, requirements.

a. Prove possession of the instrument and entitled to enforce it when loss of possession occurred. (UCC § 3-309(a)(1)).

NOTE: If illegality or fraud were involved in the original transaction, it cannot be proved that the person is entitled to enforce the instrument. (See UCC § 3-305. DEFENSES)

b. Prove non-possession of the NOTE is NOT the result of a transfer. (UCC § 3-309(a)(2)).

NOTE: If discovery shows that the instrument was sold by the person claiming the right to enforcement, a transfer occurred, and such person is NOT entitled to enforce the instrument. (See UCC § 3-309(a)(2)).

c. Prove that the person seeking enforcement cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process. (UCC § 3-309(a)(3)).

NOTE: If discovery shows that the instrument was sold by the person claiming the right to enforcement, a transfer occurred, and such person is NOT entitled to enforce the instrument. (See UCC § 3-309(a)(2)).

d. A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person's right to enforce the instrument. (UCC § 3-309(b)).

 
UCC § 3-309 ENFORCEMENT OF LOST, DESTROYED,
OR STOLEN INSTRUMENT.
(a) A person not in possession of an instrument is entitled to enforce the instrument if
  (1) the person seeking to enforce the instrument
  (A) was entitled ** to enforce the instrument when loss of possession occurred, or
  (B)

has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

 
(2)

the loss of possession was not the result of a transfer by the person or a lawful seizure; and

 

(3)

the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

(b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, Section 3-308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

  An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument. (UCC § 3-203(a)).

  If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this Article and has only the rights of a partial assignee.(UCC 3-203(d))

UCC § 3-201.  NEGOTIATION.
   (a)  "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.

 

NOTE:

Only a valid  holder in physical possession of the NOTE can assign the holder's right to enforce the NOTE to a non-holder.
 
The foreclosure claimant must be able to prove the right to enforce the NOTE by production of valid and authentic assignment agreements all the way back to the holder presently in physical possession of the NOTE.

No assumptions!  Make them PROVE IT!

If this cannot be proved, the claimant has no standing to bring a suit in foreclosure and the case must be dismissed because the court then lacks subject matter jurisdiction over the case.
 

Proof of the Terms of the Instrument
(Promissory Note and Mortgage Agreement are NOT Separable).
 

"The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity." [Fn3 Jackson v. Blodget, 5 Cowan 205; Jackson v. Willard, 4 Johnson 43.] Quotation and Footnote from:  Carpenter v. Longan, 83 U.S. (16 Wall.) 271, 274 (1872). (emphasis added)
(Access Carpenter here: http://supreme.justia.com/us/83/271/case.html)

The above referenced current and binding opinion of the Supreme Court of the United States, was recently utilized as basic law in Landmark Nat’l Bank v. Kesler, No. 98,489, by the Supreme Court of the State of Kansas, (August 2009). Access Landmark here: [Landmark Decision]
 

  If the bank, mortgage company, etc., sold the NOTE, they have no right to enforce the NOTE, through foreclosure or court proceeding pursuant to the fact that the UCC bars such claimant from invoking the court's subject matter jurisdiction of the case.

  Even if the claimant produces the original wet-ink NOTE, there is a defense to the action pursuant to UCC § 3-305.

  Illegality and false representation (fraud) perpetrated in the transaction.

  Did the bank disclose the SOURCE of the money for the transaction?

  Did the bank disclose to the NOTE issuer (you) that the money for the transaction was provided at no cost to the bank?

  Did the bank disclose that the NOTE would be sold at the earliest possible convenience, and that such sale and receipt of money from a third party would actually pay off the NOTE? (Satisfaction of Mortgage).

  Did the bank make the false representation that a "LOAN" transaction was being executed?

  Did the bank identify the issuer of the promissory note (you) as a "borrower?"

  Many discovery questions to be asked when a claimant initiates foreclosure proceedings.

  Many assume that the bank/broker/lender that begins the process is actually providing the money for making a "loan," when in fact, the bank/broker/lender is only making an "exchange," of notes, at no cost, and then, coercing the issuer of the promissory note into the comprehension that he is receiving a "loan." The following was stated in A PRIMER ON MONEY, SUBCOMMITTEE ON DOMESTIC FINANCE, COMMITTEE ON BANKING AND CURRENCY, HOUSE OF REPRESENTATIVES, 88th Congress, 2d Session, AUGUST 5, 1964, CHAPTER VIII, HOW THE FEDERAL RESERVE GIVES AWAY PUBLIC FUNDS TO THE PRIVATE BANKS [44-985 O-65-7, p89]

"In the first place, one of the major functions of the private commercial banks is to create money. A large portion of bank profits come from the fact that the banks do create money. And, as we have pointed out, banks create money without cost to themselves, in the process of lending or investing in securities such as Government bonds." [ http://www.scribd.com/document_downloads/18077819?extension=pdf ]

   In this instance, the transaction was funded by using the prospective property (collateral) and the signer's promissory note as if the property and the Note already belonged to the bank/broker/lender.

   So, if the bank used the promissory NOTE, as money, to create the cash reserve which was then used to validate the bank check issued on the face value amount of the promissory NOTE, at no cost to the bank, without NOTICE to the signer of the promissory NOTE, and without fully disclosing these facts and aspects of the transaction, the bank committed a Deceptive Practice, False Representation, and Fraud.

Followup:

    After digesting the statutory requirements for enforcement of a promissory NOTE, and it is determined that the foreclosure claimant had failed to establish standing pursuant to the statutory requirements of UCC § 3-301 and UCC § 3-309, it would be logical to conclude that the foreclosure was wrongful pursuant to the court's lack of subject matter jurisdiction over the case, therefore, the court's judgment in favor of the foreclosure claimant is voidable.

   An action to void a judgment for lack of subject matter jurisdiction over the case can be brought up at any time, even after judgment, appeal, and subsequent execution of the judgment. See Rules of Civil Procedure, Rule 60(b), (void judgment - lack of subject matter jurisdiction).

NOTE: there is a distinction between the term “subject matter jurisdiction” and “subject matter jurisdiction over the case.”

“subject matter jurisdiction” is a broad and general term referring to the court’s general subject matter jurisdiction over a class of case types. Without this jurisdiction, judgments of a court are VOID.

“subject matter jurisdiction over the case” is a sub classification within the general subject matter jurisdiction of the court. The court’s lack of subject matter jurisdiction over a particular case makes the judgment in that case VOIDABLE.

See the following case for an explanation of the difference: Edwin A. Hisle and Olive Sue Hisle Cook v. Lexington-Fayette Urban County Government, Appeal From Fayette Circuit Court, Action No. 65-CI-17431, Commonwealth of Kentucky Court of Appeals, No. 2006-CA-001733-MR. [http://162.114.92.72/COA/2006-CA-001733.pdf ]

    If the demand to "Show me the NOTE!" and that means the original wet-ink NOTE, was unfulfilled, it is more than likely that the foreclosure claimant had no right to enforce the NOTE.

Where's The Note, Who’s The Holder:
Enforcement Of Promissory Note
Secured By Real Estate

    In light of the fact that virtually all promissory notes taken by banks, mortgage companies, etc., were sold at some time after the "closing" for the respective transactions --- without the right in discovery to physically inspect, and photocopy the original wet-ink instrument, (production of the original instrument), meaning that the bank, mortgage company, etc., retained physical possession of the NOTE, or that the foreclosure claimant can PROVE a valid assignment of the rights of the holder to enforce the instrument in an unbroken chain of valid assignments from the present holder of the original wet-ink NOTE to the foreclosure claimant, standing in a court to enforce the instrument in foreclosure is impossible pursuant to the Uniform Commercial Code. (UCC). Therefore, the court has no subject matter jurisdiction over the case.

    Without possession of the original wet-ink NOTE, or proof of authentic and valid assignment of the rights of the present holder of the original wet-ink NOTE, no foreclosure action can be sustained when confronted with the Statutory Requirements for Establishing the Right to Enforce an Instrument

    If the bank is suing to enforce a NOTE and foreclose on property, and it can be shown through discovery that the bank sold (transferred) the NOTE, the bank lost the right to enforce the NOTE. See UCC § 3-309(a)(2).

Repeating:

Authoritative foundational basis for the determination of the right to enforce an instrument in a foreclosure proceeding: The foreclosure claimant must predicate the claim upon proof and evidence of physical possession or valid assignment of BOTH the NOTE and the Mortgage Agreement.

"The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity." [Fn3 Jackson v. Blodget, 5 Cowan 205; Jackson v. Willard, 4 Johnson 43.] Quotation and Footnote from: Carpenter v. Longan, 83 U.S. (16 Wall.) 271, 274 (1872). (emphasis added)
(Access Carpenter here: http://supreme.justia.com/us/83/271/case.html)

The above referenced current and binding opinion of the Supreme Court of the United States, was recently utilized as basic law in Landmark Nat’l Bank v. Kesler, No. 98,489, by the Supreme Court of the State of Kansas, (August 2009). Access Landmark here: [Landmark Decision]

 

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