The post I did on Allonges got quite a bit of attention and a whole lot of comments, most along the lines of:
“I read what you wrote about allonges and see the cases that are cited, but that law was not applied in my case, what’s going on here?”
What’s going on here is a big fat stinking mess. A mess of apocalyptic proportions. And it’s a mess that was caused because all those damn homeowners just refuse to pay their mortgages. And because they refuse to work. And because they got sick. And because they lost their health insurance. And because they got divorced. Yeah, that’s the message. This whole mess is the fault of the American people and we’re going to make them pay! (That of course is the mantra of the “leadership” in this country and not at all what I believe.)
The fact of the matter is our country is in such a mess because the entire world is being ruled by a White Collar Criminal Oligarchy and, especially here in the United States, our laws are not being followed.
Laws existed to keep things orderly, to make things predictable and in the case of the laws of commerce the laws and rules existed to help ensure a level playing field among competitors in the marketplace. I used the word “existed” past tense because there’s much evidence that we’re just not sticking to the laws and rules anymore.
Mortgages and foreclosure were simple and clean for hundreds of years. You borrowed money from a bank, if you didn’t pay, they surrendered the original note to the court, told the court how much you owed and they foreclosed on the property.
But now it’s all a big fat stinking mess. And sorry Governor Scott and all you other big shots out there…it ain’t the lowly homeowner that screwed this all up. The American people did not want entire industries shipped offshore so they would have no jobs to pay their bills. The American people did not take simple laws and rules and basic accounting and record keeping and flush them all down the toilet. The American people did not engage in high flying Wall Street shenanigans and crimes that diverted billions of dollars out of this country.
But there are still people out there that blame the American people.
A mortgage loan has two key documents…..just two. A Promissory Note and A Mortgage. The rules on the mortgage are governed by the state’s real property laws…most of which have been on the books with little change from the very early days of this country. The rules governing the note are found in state statutes, the Uniform Commercial Code.
The Uniform Commercial Code is key because the Promissory Note is the most important document when you’re trying to foreclose the mortgage. The UCC is a body of law that has been drafted, refined and worked over by smart people for hundreds of years. Every few years a whole gaggle of smart people…lawyers, judges and other thinkin’ folks get locked in a huge room and they sit around tinkering with the words, tweaking them and refining them to make the laws and the rules better, and to respond to changes out in the real world.
Well, the UCC is very simple and real clear on promissory notes. You need the original to enforce the debt. Now there is a minor and very narrow exception, but the general rule is the original document is the key. (Now this is so basic, so elemental, such a bedrock principle that it was just incomprehensible to anyone with a few days of legal training to hear the Florida Mortgage Bankers Association tell the Florida Supreme Court that they purposely destroyed the notes, but that’s a whole other story.)
The UCC has real clear rules on how you transfer these original notes and who is authorized to enforce them….but the UCC and the drafters were totally blindsided by the explosion in the use of allonges. The UCC’s scant treatment of allonges might have been okay….for a little while…until the smart people could get together and establish clear rules on their use…if the people who were out there using allonges could be trusted…but if we’ve learned nothing else through all of this it should be, it must be that we cannot trust the financial services industries.
If nothing else the Wall Street Wizards and the Serpents of Securitization are guilty of gross and systemic incompetence and/or gross and systemic malfeasance…and/or gross and systemic fraud, lies and criminal conduct. It’s one or two or a combination of all three and from where I sit, there’s a whole lot of fraud and lies and criminal conduct involved….I say this based on the amount of money coursing through the world economy and the growing body of evidence about the lies and the fraud and the crimes from the top to the bottom of many of the financial transactions were all focused on.
HELLO $700 BILLION BAILOUT!
HELLO $8.5 BILLION BANK OF AMERICA SETTLEMENT!
HELLO BILLION DOLLAR “PROFITS” ON WALL STREET!
But back to allonges…our courts should have been requiring the lenders to present and surrender original promissory notes in foreclosure. Our courts should have been requiring clear pleading on who owns the billions of dollars in promissory notes that are being foreclosed upon. Our courts should have been requiring clear, proper endorsements and evidence of ownership. But they didn’t and they are not. And so the problems will continue to pile on. Things will only get worse. We cannot just walk away from all of this.
Two decisions below reflect several interesting aspects of the battles that are raging all across America. In Re: Veal offers the most comprehensive and technical discussion of ownership, holder and the legal framework established by the Uniform Commercial Code. Taylor v. Deutsche Bank is a case study in what happens when the Uniform Commercial Code is not applied…the decision reflects a collision between the Uniform Commercial Code and our laws on real property. It’s an aberrant decision for many reasons, not the least of which because it asserts a power not provided within our existing understanding of the whole MERS system. The Taylor decision asserts that MERS can assign notes…a power not argued by the Plaintiffs in the case and not even raised as part of the appellate arguments. The proof that it is an aberrant decision, at odds with the intentions of MERS itself is found in the fact that this decision is not cited or championed by the industry….it simply opens a Pandora’s box that not even the industry wants opened….(I have a personal connection to this case, having argued the case before the Fifth Circuit Court of Appeals and it remains a real head scratcher among the legal community.)