” A lie told often enough becomes the truth.”
““ Vladimir Lenin, adopted and reused by Joseph Goebbels
Repeat a lie long enough until it becomes the truth. That’s what’s occurring in the space of negotiable instruments and the Uniform Commercial Code. The bottom line is mortgage notes are NOT negotiable instruments. What is the definition of a negotiable instrument? Well, Florida Statutes gives us a very clear definition:
The term ” 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:
(a)”ƒIs payable to bearer or to order at the time it is issued or first comes into possession of a holder;(b)”ƒIs payable on demand or at a definite time; and(c)”ƒDoes 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.
So what is a negotiable instrument? Well, it’s real simple. A check is a negotiable instrument. It is simple, it is clear. It is, as they say,
“A passenger with no baggage.”
What is not? That mortgage note that carries with it so much baggage……but convincing courts of this after so much bad decisional law and appellate decisions that point in several different directions at once is a feat that is probably too optimistic. Now keep in mind that although there are tens of dozens of decisions relating to negotiability there are only two decisions in all of American written jurisprudence where a thorough analysis of a mortgage note’s negotiability has occurred.
So climbing that mountain is probably way too optimistic. But a smaller piece that could be bitten off is the requirement that the rights of the party in possession be clearly demonstrated with written evidence.
673.2031″ƒTransfer of instrument; rights acquired by transfer.(4)”ƒIf a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this chapter and has only the rights of a partial assignee.
When a servicer comes to court acting on behalf of any owner they have necessarily been transferred less than the entire instrument. They take then no rights of a holder, and whatever rights they may have must be demonstrated and proven.
But this is all just too much to break off, isn’t it? The lie has persisted too long and is becoming far too entrenched, isn’t it?
No, not yet. We all need to speak up, and continue developing these issues…..
Applying these principals to foreclosure actions, the correct party-plaintiff would therefore be the party who: (1) suffered some injury, either economic or noneconomic, by the mortgagor sufficient to stake a claim in the dispute; and (2) be either the party who suffered the injury, or an entity who is maintaining the action on behalf of the aggrieved party. Simply put, if these two prongs are met, then standing has been conferred; if not, the named plaintiff lacks standing and is not a proper-party plaintiff.
Sundry problems beyond mere pleading deficiencies arise in failing to delineate exactly who may sue for foreclosure have been caused primarily by the mad rush to securitize, or package, the underlying promissory notes so that they can be sold on the secondary market. These problems include: (1) whether the promissory note sued upon is even a negotiable instrument and therefore whether a plaintiff may claim standing pursuant to Section 673.3011; (2) if the note is in fact negotiable, how a transfer of it merely through negotiation can transfer the non-negotiable mortgage; and (3) whether the suing plaintiff is the party responsible for certain pre-suit conditions precedent, or whether this can be delegated to a non-suing party.