Foreclosure Defense Florida

Mortgage Notes Are NOT Negotiable Instruments– One of My First Posts EVER!

This little ole blog has been around since July 2009.   At that time, blogs were new and frankly the defense of foreclosures was not particularly sophisticated.   I knew way back then that there were major problems with foreclosures, but then the theories were not yet developed.   So many of the issues have been more fully developed since then, but too many of them still remain undeveloped.

As I’ve recently been digging into the fact that notes are not negotiable, I realized that I first wrote about this issue as one of my first posts.   I’m frustrated that we haven’t really developed that issue yet, but then again I’ve only pursued the issue once at trial….but check this out:

In nearly every foreclosure case filed in Florida, the law firms include a count in the lawsuit to ” re-establish a lost note”.   In order to prevail in a foreclosure case, the lender must present to the court the original promissory note singed by the borrower at closing.   Because these note are often lost, a technical legal procedure was developed which allows the plaintiff to present to the court a copy of that note and ask the court to rule that the copy presented is just as good as the original note.

In many cases, the Plaintiffs will be able to produce a copy of the note that was ” lost”, at some point in time in the proceedings.   In this case, the lost note count is dropped and the foreclosure case moves forward without this techincal problem.   In some cases however, the Plaintiff either cannot even produce a copy of the promissory note or the promissory note signed by the borrower does not fit the precise legal definition of a ” negotiable instrument” that is subject to the techincal reestablishment procedures.

In either of these cases, the Plaintiff is going to have a very hard time proceeding with their forecloure case and they have very few easy options which would allow them to prevail in their foreclosure case”¦confronting this reality should encourage the lender to enter into very favorable mortgage modifcation discussions with the borrower, but more often than not it seems the attorneys just abandon the case leaving the homeowner in a home with noone to make a mortgage payment to and nonone calling or making any attempts to get them to pay.


Or how about this one:

The first question a competent attorney should ask is, ” Does the plaintiff who is suing my client have the right to file a lawsuit in Florida against my client?”   The fact of the matter is that a variety of statutes and rules prohibit various persons and entities from availing themselves of the jurisdiction of Florida courts.

Minors may not alone avail themselves of the jurisdiction of any court of this state; neither may individuals who are otherwise incompetent.   Minors and incompetents may only access the courts of this state through guardians or other legal representatives.   Personal representatives appointed by in estates opened in other states may not maintain suit in this state.   An ancillary estate must be opened in this state.   Businesses operating as a fictitious name may not maintain suit.   Only the individual who runs that entity may file suit.   Foreign corporations not registered with the Secretary of State may not maintain suit in this state.   They must first register as a foreign corporation.


If these two issues alone had been pursued the landscape would be much different than things are today….


  • Attorney Wendy Alison Nora says:

    I went back to your original postings, too, Matt and saw this one. We were on the right track back in 2009 and then there was an explosion of apparent concessions that the mortgage note is a negotiable instrument, covered by the UCC, as opposed to a real property transaction, subject to the Statute of Frauds. I think it was the MERS distraction which got us off the Statute of Frauds and threw us into the UCC. With MERS Rule 8, we can see that the fraud operation is now in search of the note OWNER. We next go to the Pooling and Servicing Agreements and find that the mortgages were not assigned by the trust closing date and usually not until years later. When the “original” note shows up, we find that many 7, 8, 9 year old notes are on crisp white paper (hot off the computer printer) with photo-shopped iridescent blue ink signatures and the endorsement in blank, or as I prefer to say “to BLANK,” is created by laser jet technology. We need these mortgage notes to be handed over to the custody of law enforcement for professional document examination. A qualified document examiner can tell the difference between a computer printed signature and one done in ink. In other words, the endorsements on the mortgage notes are not even being robo-signed. They are being printed by computer printers from imaged documents.

  • Attorney Wendy Alison Nora says:

    Your early blog on capacity was also much appreciated. I have one case in which a d/b/a is suing (no capacity) and there are countless foreclosures which have proceeded in the names of entities which were not registered to do business as foreign corporations in the states in which the foreclosures occurred. Most states require allow an entity to sue on its own debt without registration, but not to sue to collect debts on behalf of others. Check to see if MERS was registered to collect debts on behalf of others in your state when it claimed to be a servicer. We further now know that MERS was never nominated to be the mortgage by any subsequent the note OWNER. MERS was acting as a debt collector and, in Wisconsin, was never registered to do business in the State of Wisconsin or in the State of Minnesota. Minnesota has a specific statute which allows MERS to record documents as an agent, but not to foreclose or collect debts for another. Then MERS started allowing thousands of vice presidents to assigning its interest and what has it assigned is the right to record in Minnesota and lack of capacity in both states. Let us not be further distracted by the MERS dodge between its claim of capacity as mortgagee (fraud on the courts and the public records), the MERS assignments by thousands of remote vice-presidents (robo-signing fraud assigning nominee status only) and now its Rule 8 requiring the note OWNER to assign the mortgage out of MERS. MERS capacity must must still be addressed in the chain of title (Statute of Frauds.)

  • triumphant says:

    Matt, right on. Another thing just occurred to me, and I think Judge Walt Logan was onto this several years ago.

    Since the advent of MERS, thousands upon thousands of Florida homeowners have had satisfactions of mortgages recorded memorializing the paid status not only of the mortgage, but also of the note. Would you agree that these same individuals almost NEVER receive the note back marked “cancelled” or “paid?” In fact, the mortgage industry tells us that the notes are almost never returned, and that the satisfactions (which are required to be recorded under Florida law, and as opposed to a naked “release” of mortgage) suffice as evidence that the underlying note has been paid.

    So it occurs to me that if, since MERS, it is SOP to NOT return the notes marked “cancelled” or “paid,” then how could the notes has EVER been negotiable instruments? They cannot be, as they always were “secured non-negotiable notes” which can be deemed to have been cancelled by reference to a separate writing recorded in the official records of the county clerks.

    Looks to me like the industry cannot have it both ways: Either 1) the satisfactions of mortgages are valid and the notes are paid and gone, or 2) the notes are negotiable instruments still out there in the stream of commerce and the satisfactions were and are totally bogus.

    Your comments?

  • Mark Bowen says:

    How about the fact that in the vast majority, if not all, of those cases inwhere a lost note count was made part of the Initial Pleading, those Complaints are Ammended without Leave of the Court. Those purported Plaintiff’s, through their imaginary Counsel, simply file a Notice of Filing Original Note and Mortgage. Then you have those thousands of cases where the “Original”s were produced at Trial and accepted just prior to Adjudication. Where is the outcry regarding all of those, again thousands, of unlawful acts by Judges who, more often than not, are clearly adjudicating in strong favor of those Plaintiffs and consistantly (I personally have more hard evidence of this than I could ever possibly need to support these claims)ruling without legal authority?

  • BC says:

    I am in Michigan. Under the UCC Article 3-202, “Holder in Due Course” specifically states the a holder in due course who takes an instrument:

    1) The instrument does not bear such apparent evidence of forgery or alteration.

    2) The holder took the instrument for (i) Value (ii) in good faith (iii) * WITHOUT NOTICE THAT THE INSTRUMENT WAS OVERDUE OR DISHONORED OR THERE IS AN UNCURED DEFAULT.

    Michigan Courts have found that a Mortgage Agreement does not contain an unconditional promise to pay a certain sum, but a mortgage merely secures a payment of the negotiable instrument. In effect, the Mortgagor merely grants a security interest in the real property to the mortgagee.

    A Mortgage Agreement as construed by Michigan Courts is a Non-Negotiable Instrument.

    Now, here is the dilemma in Michigan. Most Mortgage agreements designate MERS as “Nominee” and place holder for the “Mortgagee”. Another party holds the Note. For example Fannie Mae of Freddie Mac.

    Under Federal and State Laws, the Mortgage follows the Note. It is presumed that the Mortgage and Note always stay together. These laws go back 150 years.

    Since Fannie and Freddie do not want to foreclose in their names, they have to assign, transfer or sell the Note to the party foreclosing, but they cannot. A party cannot take an instrument with knowledge that it is in default. Further it becomes non-negotiable upon default.

    MERS does not want Mortgage Servicers to foreclose in the name of MERS either. The Mortgage Agreement is Non-Negotiable by law. MERS cannot lawfully assign the mortgage agreement to the foreclosing party.

    They are stuck. Attorneys argue that since the mortgagee grant MERS as nominee and Mortgagee in the Mortgage, they have all the same rights as the true mortgagee. The Mortgagor grants MERS the ability to assign the mortgage. If a Mortgage Agreement in Michigan is Non-Negotiable and the person signing on MERS behalf is the foreclosure attorney, then the attorney is rightfully aware of the default. Which even if a court states that MERS does have the right to assign per the mortgage agree, they cannot under UCC Article 3-202. Any instrument that is robo-signed under the UCC, the instrument bears a forgery and therefore is null and void.

    Last, a MERS authorized signer cannot assign the mortgage, when the attorney knows the note has an uncured default.

    The biggest error I see attorneys making in representing foreclosure cases is that they do not use the laws that govern banks, mortgages, currency and negotiability through the UCC.

    It gets even better when you dive into Article 8 of the UCC “Investable Securities”…Then a note completely become non-negotiable.

  • Doug Fraley says:

    Matt… I live in Florida and my issue is Bank United sold our note to Countrywide and Countrywide sold to Bank of America…I recently went to 9 surrounding county courthouses and there is nothings recorded anywhere for our mortgage or note past Bank United recorded note…I requested from BOA a copy of our note and they sent me a copy of our 6 page loan modification from Countrywide dated 3 yrs ago…there cover letter says “Unfortunetly we are unable to provide you with the following Loan Document you requested: Other: is not available because the document n/a”
    I became disabled 2 yrs ago and BOA won’t modify our mortgage and I can’t keep draining my little savings to save my only asset… does the note have to be recorded ? … do I have a leg to stand on to get them to come to the table? … how should I proceed? … Doug

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