Post on 12-Jul-2020
© Copyright 2010 j.mcguire P O Box 1352, Beford, Texas 76095‐1352 Page 1
“Had A Note” For those that wish to have the Original
“Have a Note” it is Available for Direct
Download From the Following
Author Approved Sites http://www.ourlemon.com/nshan%20fa.pdf
Page 1 of 37 8/16/10
Copyright 2010 by j.mcguire P.O. Box 1352 Bedford, TX 76095-1352 j.mcguire@swbell.net Page 1 of 1
Case Closed: eNotes are Not Legal
Incorrect Analysis of eNote Enforceability Nationwide Mortgage Industry Standards Maintenance Organization (MISMO, a registered service mark of the Mortgage Bankers Association), Electronic Signature Records Association, and the American Land Title Association released a White Paper1 titled “Case Closed: eNotes Are Legal”. The White Paper’s “Disclaimer” notes that “the authors and their organizations accept no responsibility for errors and omissions”.
The Error: eNotes are Not Legal
The Omission: 15 USC 7003
“UETA and ESIGN’s approach is noteworthy in that neither statute attempts to insert the concept of a transferable record into the UCC. Instead, UETA and ESIGN exclude from their scope most of the UCC…” page (3). The Conclusion of the White Paper incorrectly states: “UCC Article 3 provisions for promissory notes were not designed for use with electronic records. Rather, ESIGN and UETA were enacted to create the legal framework or a parallel structure for the electronic equivalent of a paper promissory note, known as a “transferable record”. As a result, an eNote that is created stored and maintained as required under ESIGN and UETA is a valid, enforceable and negotiable debt obligation.” The White Paper itself states that ESIGN and UETA both exclude the Uniform Commercial Code (UCC)– Article 3 – which governs Negotiable Instruments. The authors then attempt to persuade the reader that ESIGN and UETA provide sufficient governing laws to support the existence and the enforceability of an eNote. As ESIGN and UETA both exclude UCC Article 3 and the UCC was not designed for and currently does not allow for eNotes, eNotes lack supporting law to exist.
MISMO’s current day to day operations falls under the MERS umbrella.
ENotes are “Not Legal”
Under the ESign Act or the Uniform Commercial Code ESign 15 USC 7003 excludes the Uniform Commercial Code Article 3
1http://www.mbaa.org/files/ResourceCenter/emortgage/eNoteWhitePaper.pdf
Page 2 of 37 8/16/10
Copyrighted 2010 j.mcguire P O Box 1352, Bedford, Texas 76096‐1352 j.mcguire@swbell.net Page 1
Legal-Legal-Legal “E-Notes are Legal”
“No they’re not”
Being young and without wisdom and knowledge many believed the Tooth Fairy and the Easter Bunny were real. We were told they were real and we believed.
We shall not include Santa Claus as the author still believes in what Santa Claus and
Christmas stands for.
Wisdom and Knowledge
Does the average bank teller have any idea their employer may be a part of the biggest fraud in history, No.
Does the average real estate broker have any idea the banks they deal with may be a part of the biggest fraud in history, No.
Does any average person have any idea they may be a part of the biggest fraud in history, No.
Compartmentalization of employees is what has aided in the biggest fraud in history to be accomplished. Cubicle A, Cubicle B, Cubicle C have all been told their actions that are
preformed are in legal compliance. They believe.
The front line employee has no idea that their actions aid in perpetuating the biggest fraud in
history. They believe.
My computer says the electronic negotiable note is here so they believe it’s real… No it’s not.
Electronic Negotiable Notes (E-Notes) are legal. No they’re not. That’s what they want us to believe.
E-Sign 15 USC 7003 excludes Uniform Commercial Code Article 3 – Negotiable Instruments
So just like with the Tooth Fairy and the Easter Bunny we learn through wisdom and knowledge that E-Notes are not real. (Lacks supporting laws)
Page 3 of 37 8/16/10
Lender 2BankSeller
Securitizer
Lender 3Depositor
ToTrust
Lender 4Trustee
For the BenefitOf the Trust
E-Sign ActBook Entry
Scan Copy/ElectronicAssignment of Electronic
Negotiable Instrument
Servicer’sRecords Vault
Holder ofPaper
Documents
Scan/Copy
E-Sign ActBook Entry
Assignment of ElectronicNegotiable Instrument
E-Sign ActBook Entry
Assignment of ElectronicNegotiable Instrument
Invalid use of E-Sign Act - 15 USC 7001
15 USC 7003The provisions of section 7001 of this title shall not apply to a contract or other record to the extent it is
governed by—(3) the Uniform Commercial Code, as in effect in any State, other than sections 1–107 and 1–206 and
Articles 2 and 2A.
Lender 1Originator
Mortgage Loan PoolSwap
Trust Certificates
Pooling & ServicingAgreement
AgentOr
IndependentContractor
Direction&
Control
Non-Innocent Purchaser
TransferOf Custodial
Rights
TransferOf Custodial
Rights
TransferOf Custodial
Rights
Lender 4Custodian
For the BenefitOf the Trust
E-Sign ActBook Entry
Assignment of ElectronicNegotiable Instrument
Non ComplianceUCC Article 3 3-203
Invalid use E-Sign Act
Non ComplianceUCC Article 3 3-203
Invalid use E-Sign Act
Non ComplianceUCC Article 3 3-203
Invalid use E-Sign Act
Non ComplianceUCC Article 3 3-203
Invalid use E-Sign Act
Copyright J McGuire 2009 j.mcguire@swbell.net
Page 4 of 37 8/16/10
Lender 2Bank
Seller toFannie Mae
Lender 3Fannie MaeSecuritizer
Trusts
Lender 4Custodian
For the BenefitOf the Trust
E-Sign ActBook Entry
Scan Copy/ElectronicAssignment of Electronic
Negotiable Instrument
ServicerRecords Vault
HolderPaper
Documents
Scan/Copy
Single-Family MBS ProspectusGuaranteed Mortgage Pass-Through Certificates
(Single-Family Residential Mortgage Loans)
Mortgage PoolsWe require each mortgage loan to meet our published standards for loans that we purchase, except to the extent
that we have permitted variances from those standards. We may change our standards from time to time.
UCC 3-203TRANSFER OF INSTRUMENT
RIGHTS ACQUIRED BY TRANSFER(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the
instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.
E-Sign ActBook Entry
Assignment of ElectronicNegotiable Instrument
E-Sign ActBook Entry
Assignment of ElectronicNegotiable Instrument
Non ComplianceUCC Article 3 3-203
Non ComplianceUCC Article 3 3-203
Non ComplianceUCC Article 3 3-203
Lender 1Originator
Mortgage Loan PoolSwap
Trust Certificates
Fannie MaeContractualGuidelines
AgentOr
IndependentContractor
Direction&
Control
Non-Innocent Purchaser
TransferOf Custodial
Rights
TransferOf Custodial
Rights
TransferOf Custodial
Rights
Page 5 of 37 8/16/10
OriginalPromissory
Note
ABCServicer
Lender 1OriginatorScan/Copy/
Store
XYZServicer
Vault
Paper Note
DocumentCustodian
Lender 2SellerMBS
TransfersServicing Rights
TransferOwnershipBy E-Note
NegotiationE-Note
NON-ComplianceUniform
CommercialCode
RegisterElectronicTracking
OwnershipServicing
RegisteredTrackingSystem
UpdateTracking
Lender 3Depositor
MBS
Lender 4Trustee
MBS
Mortgage Backed SecuritizationNegotiation by E-Note (Electronic)
Securities RegisteredElectronic Tracking
Cede & Co., Clearstream,
Euroclear
UpdateTracking Update
TrackingUpdate
Tracking
HomeownerContactLimited
To Servicer
SecuritiesCertificates
OwnerPromissory Notes
PromissoryNotes
SwappedFor
SecuritiesCertificates
Promissory NotesHeld in Trust forThe Benefit of theCertificateholders
Lacks EndorsementsPer UCC
DefaultWithdrawal
PerPSA
Agreement
WithdrawPromissory
NoteFrom Securities
Contractual
DefaultReferredLaw Firm
Legal Action
OriginalPromissory
NoteRetrieved
CourtEvidence
Non-Negotiated Promissory NoteLost Note Affidavit with
Printed Out Graphic Image
Paper Note v Electronic Note
Page 6 of 37 8/16/10
PromissoryNote
LoanOriginatorObligee 1
ObligorExecutes
PromissoryNote toObligee
SecurityInstrument
LoanOriginatorObligee 1
ObligorExecutesSecurity
Instrumentto
Obligee
Rec
orda
tion
Stat
utes
Public Records
Deed of TrustRecordedValid Lien
SellerSecuritizer
OfTrust
Obligee 2
SellerSecuritizer
OfTrust
Obligee 2C
ontr
actu
ral
Pool
ing
Serv
icin
gA
gree
men
t
NotRecorded In
Public Records
Obligee 1Assigns
NoteTo
Obligee 2
Obligee 1AssignsSecurity
InstrumentTo
Obligee 2
DepositorTo
TrustObligee 3
DepositorTo
TrustObligee 3
Obligee 2Assigns
NoteTo
Obligee 3
Obligee 2AssignsSecurity
InstrumentTo
Obligee 3
BankTrustee
ForTrust
Obligee 4
Obligee 3Assigns
NoteTo
Obligee 4
Obligee 3AssignsSecurity
InstrumentTo
Obligee 4
BankTrustee
ForTrust
Obligee 4
BankCustodian
ForTrust
Obligee 5
Obligee 4Assigns
NoteTo
Obligee 5
Obligee 4AssignsSecurity
InstrumentTo
Obligee 5
BankCustodian
ForTrust
Obligee 5
BankTrustee
ForTrust
Obligee 6
BankTrustee
ForTrust
Obligee 6
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Validity
BankCustodian
ForTrust
Obligee 5
Obligee 5Assigns
NoteTo
Obligee 6
Obligee 5AssignsSecurity
InstrumentTo
Obligee 6
BankCustodian
ForTrust
Obligee 5
ElectronicRecordation
MERS
Law Firm
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Validity
Printed Out CopiesPromissory Note
Security Instrument
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Validity
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Validity
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Validity
Law Firm
CopiesPromissory Note or Lost Note Affidavit
Security Instrument
CourtOpinion
PerpetuatesFraud on
Wall Street
Rules in FavorOf Obligee
DischargeDebt
Obligation
Rules in FavorOf Obligor
Discharge of Debt ObligationOr
Perpetuates Fraud on Wall Street
Page 7 of 37 8/16/10
PromissoryNote
LoanOriginatorObligee 1
ObligorExecutes
PromissoryNote toObligee
SecurityInstrument
LoanOriginatorObligee 1
ObligorExecutesSecurity
Instrumentto
Obligee
Rec
orda
tion
Stat
utes
Public RecordsPerfected Lien
SellerSecuritizer
OfTrust
Obligee 2
SellerSecuritizer
OfTrust
Obligee 2C
ontr
actu
ral
Pool
ing
Serv
icin
gA
gree
men
t
NotRecorded In
Public Records
Obligee 1Assigns
NoteTo
Obligee 2
SecurityInstrument
Assignment MERSNon MOM
DepositorTo
TrustObligee 3
DepositorTo
TrustObligee 3
Obligee 2Assigns
NoteTo
Obligee 3
Security InstrumentSeparated From NoteRegistered E-Registry
BankTrustee
ForTrust
Obligee 4
Obligee 3Assigns
NoteTo
Obligee 4
E-RegistryUpdated
BankTrustee
ForTrust
Obligee 4
BankCustodian
ForTrust
Obligee 5
Obligee 4Assigns
NoteTo
Obligee 5
E-RegistryUpdated
BankCustodian
ForTrust
Obligee 5
BankTrustee
ForTrust
Obligee 6
BankTrustee
ForTrust
Obligee 6
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
BankCustodian
ForTrust
Obligee 5
Obligee 5Assigns
NoteTo
Obligee 6
Obligee 5AssignsSecurity
InstrumentTo
Obligee 6
BankCustodian
ForTrust
Obligee 5
ElectronicRecordation
MERSNon-Perfected Lien
Law Firm
Registration on MERSPromissory Note
Security InstrumentInvalid Transfer of Lien
Invalid Lien
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
Court
CopiesPromissory Note or Lost Note Affidavit
Security Instrument
CourtOpinion
PerpetuatesFraud on
Wall Street
Rules in FavorOf Obligee
DischargeDebt
Obligation
Rules in FavorOf Obligor
Discharge of Debt ObligationOr
Perpetuates Fraud on Wall Street
Bank As TrusteeObligee 6MortgageServicer
Printed Out CopiesPromissory Note
Security Instrument
RegisterationTracking
Deed of TrustRecorded
ForeclosureClauseDeed of
Trust(Trigger)
PerfectedLien
ForeclosureClauseDeed of
Trust(No Trigger)
UnperfectedLien
ForeclosureClauseDeed of
Trust(No Trigger)
UnperfectedLien
UnperfectedLien
UnperfectedLien
UnperfectedLien
UnperfectedLien
Page 8 of 37 8/16/10
PromissoryNote
LoanOriginatorObligee 1
ObligorExecutes
PromissoryNote toObligee
SecurityInstrument
LoanOriginatorObligee 1
ObligorExecutesSecurity
Instrumentto
Obligee
Rec
orda
tion
Stat
utes
Public RecordsMERS
Beneficary
SellerSecuritizer
OfTrust
Obligee 2
SellerSecuritizer
OfTrust
Obligee 2
Con
trac
tura
lPo
olin
gSe
rvic
ing
Agr
eem
ent
NotRecorded In
Public Records
Obligee 1Assigns
NoteTo
Obligee 2
DepositorTo
TrustObligee 3
DepositorTo
TrustObligee 3
Obligee 2Assigns
NoteTo
Obligee 3
Security InstrumentSeparated From NoteRegistered E-Registry
BankTrustee
ForTrust
Obligee 4
Obligee 3Assigns
NoteTo
Obligee 4
BankTrustee
ForTrust
Obligee 4
BankCustodian
ForTrust
Obligee 5
Obligee 4Assigns
NoteTo
Obligee 5
E-RegistryUpdated
BankCustodian
ForTrust
Obligee 5
BankTrustee
ForTrust
Obligee 6
BankTrustee
ForTrust
Obligee 6
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
BankCustodian
ForTrust
Obligee 5
Obligee 5Assigns
NoteTo
Obligee 6
BankCustodian
ForTrust
Obligee 5
ElectronicRecordation
MERSNon-Perfected Lien
Law Firm
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien
Invalid Lien
Court
CopiesPromissory Note or Lost Note Affidavit
Security Instrument
CourtOpinion
PerpetuatesFraud on
Wall Street
Rules in FavorOf Obligee
DischargeDebt
Obligation
Rules in FavorOf Obligor
Discharge of Debt ObligationOr
Perpetuates Fraud on Wall Street
Bank As TrusteeObligee 6MortgageServicer
Printed Out CopiesPromissory Note
Security Instrument
RegisterationTracking
Deed of TrustRecorded
Invalid LienMERS MOM
Loan
ForeclosureClauseDeed of
Trust(No Trigger)
UnperfectedLien
ForeclosureClauseDeed of
Trust(No Trigger)
UnperfectedLien
ForeclosureClauseDeed of
Trust(No Trigger)
ForeclosureClauseDeed of
Trust(No Trigger)
ForeclosureClauseDeed of
Trust(No Trigger)
E-RegistryUpdated
E-RegistryUpdated
E-RegistryUpdated
Page 9 of 37 8/16/10
ObligorSigns
PromissoryNote
Obligee 1Takes
PossessionNegotiableInstrument
NoYes
OriginalObligee 1Maintains
PossessionPromissory Note
MaintainsServicing
&Collection
Returns NoteUpon FullPayment
ObligorSigns
Deed of Trust
RecordationPublic Land
Records Office Creates
Valid Lien
Notice of AssignmentFrom ObligorTo Obligee 1
Obligee 1Assigns Note
ToObligee 2
(Securitizer)Release of Lien
Filed with Public LandRecords Office
RecordationPublic Land
Records Office TransfersValid Lien
Negotiation RequiresCompliance with
Uniform Commercial Code Article 3
SecuritizerAssigns Note
ToObligee 3
(Depositor)
DepositorAssigns Note
ToTrustee for Trust
TrusteeAssigns Note
ToTrust (MBS)
RecordationPublic Land
Records Office TransfersValid Lien
RecordationPublic Land
Records Office TransfersValid Lien
RecordationPublic Land
Records Office TransfersValid Lien
Notice of AssignmentObligee 1 to Securitizer
Notice of AssignmentSecuritizer to Depositor
Notice of AssignmentDepositor to Trustee
Notice of AssignmentTrustee to Trust (MBS)
Assignment
Assignment
Assignment
Trust (MBS)Assigns Note
ToTrustee
RecordationPublic Land
Records Office TransfersValid Lien
Notice of AssignmentTrustee to Trust (MBS)
Assignment
Law Firm
Temporary Transfer of Note
Deed of TrustHolder
Holder in Due CourseRights to Enforce
Non-JudicialForeclosure
TrusteeSale
RecordationPublic Land
Records Office
Substitute TrusteeSale Recorded
3rd Party PurchaseREO Property
Required AssignmentsEnforcement Rights
Holder in Due Course
Page 10 of 37 8/16/10
ObligorSigns
PromissoryNote
Obligee 1Takes
PossessionNegotiableInstrument
NoYes
OriginalObligee 1Maintains
PossessionPromissory Note
ObligorSigns
Deed of Trust
RecordationPublic Land
Records Office Creates
Valid Lien
Notice of AssignmentFrom ObligorTo Obligee 1
Obligee 1Assigns Note
ToTrustee
Negotiation RequiresCompliance with
Uniform Commercial Code Article 3
RecordationPublic Land
Records Office Invalid Filing
Notice of AssignmentObligee 1 to Trustee
Law Firm
Temporary Transfer of Note
Deed of TrustLacks Holder
Holder in Due CourseRights to Enforce
Non-JudicialForeclosure
TrusteeSale
RecordationPublic Land
Records Office
Substitute TrusteeSale Recorded
3rd Party PurchaseREO Property
Actual Assignments
Page 11 of 37 8/16/10
PromissoryNote
WAMU
WAMUTakes
PossessionNegotiableInstrument
Deed of Trust
RecordationPublic Land
Records Office Creates
Valid Lien
Notice of AssignmentDeed of Trust
WAMUAssigns Note
To(Securitizer)
Unknown
RecordationPublic Land
Records Office Transfers
Maintains Valid Lien
Holder in Due Course
SecuritizerAssigns Note
To(Depositor)Unknown
DepositorAssigns Note
ToTrustee for Trust
TrusteeAssigns Note
ToTrust (MBS)
RecordationPublic Land
Records Office Transfers
Maintains Valid Lien
RecordationPublic Land
Records Office Transfers
Maintains Valid Lien
RecordationPublic Land
Records Office Transfers
Maintains Valid Lien
Notice of AssignmentWAMU to Securitizer
Notice of AssignmentSecuritizer to Depositor
Notice of AssignmentDepositor to Trustee
Notice of AssignmentTrustee to Trust (MBS)
UCC Assignment
UCC Assignment
UCC Assignment
FDICReceivership
Deed of TrustForeclosure Clause
Upon Default ofDebt Obligation
Non-JudicialForeclosure
TrusteeSale
RecordationPublic Land
Records Office
Substitute TrusteeSale Recorded
Required AssignmentsTo Maintain Holder in Due Course
And Rights to Enforce
JP Morgan ChaseTrustee
Trust (MBS)Assigns Note
ToJP Morgan Chase
Trustee
Notice of AssignmentTrust (MBS) to Trustee
UCC Assignment
TriggerForeclosure
Clause inDeed of Trust
12 USC 1821 (d) (2) (A) (i)
12 USC1821 (d) (2) (A) (i)
TITLE 12 > CHAPTER 16 > § 1821 (d) Powers and duties of Corporation as conservator or receiver(2) General powers (A) Successor to institution The Corporation shall, as conservator or receiver, and by operation of law, succeed to—
(i) all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution; and (ii) title to the books,
records, and assets of any previous conservator or other legal custodian of such institution.
9-10-2009 JM
Update Public LandRecords Office to
Maintain Valid LienTexas Property Code11.001-12.001-13.001
Page 12 of 37 8/16/10
PromissoryNote
WAMUTakes
PossessionNegotiableInstrument
Deed of Trust
RecordationPublic Land
Records Office Creates
Valid Lien
WAMUAssigns Note
To(Securitizer)
Unknown
RecordationPublic Land
Records Office Transfers
(Not Recorded)
Holder in Due Course
SecuritizerAssigns Note To
(Depositor)Non Holder in Due
Course
DepositorAssigns Note ToTrustee for Trust
Non Holder in Due Course
TrusteeAssigns Note
ToTrust (MBS)
Non Holder in Due Course
RecordationPublic Land
Records Office Transfers
(Not Recorded)
RecordationPublic Land
Records Office Transfers
(Not Recorded)
RecordationPublic Land
Records Office Transfers
(Not Recorded)
Notice of AssignmentWAMU to Securitizer
Notice of AssignmentSecuritizer to Depositor
Notice of AssignmentDepositor to Trustee
Notice of AssignmentTrustee to Trust (MBS)
Assignment
Assignment
Assignment
FDICReceivership
Non Holder in Due Course
Deed of TrustForeclosure Clause
Upon Default ofDebt Obligation
Non-JudicialForeclosure
TrusteeSale
RecordationPublic Land
Records Office
Substitute TrusteeSale Recorded
Actual Assignments“NO” Holder in Due Course
“NO” Rights to Enforce
JP Morgan ChaseTrustee
Trust (MBS)Assigns Note ToJP Morgan Chase
TrusteeNon Holder in Due
Course
Notice of AssignmentTrust (MBS) to Trustee
Assignment
TriggerForeclosure
Clause inDeed of Trust
12 USC 1821 (d) (2) (A) (i)
12 USC1821 (d) (2) (A) (i)
TITLE 12 > CHAPTER 16 > § 1821 (d) Powers and duties of Corporation as conservator or receiver(2) General powers (A) Successor to institution The Corporation shall, as conservator or receiver, and by operation of law, succeed to—
(i) all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution; and (ii) title to the books,
records, and assets of any previous conservator or other legal custodian of such institution.
Update Public LandRecords Office to
Maintain Valid LienTexas Property Code11.001-12.001-13.001
Non Compliance
AssignmentDeed of Trust
Recorded
9-10-2009 JM
Page 13 of 37 8/16/10
PromissoryNote
Lender 1Originator
Deed of Trust
PublicRecords
ObligorLender 2
(SellerSecuritized
Trust)
Lender 3(Depositor
Trust)
OwnerHolder
NegotiableInstrument
Owner of NoteHolder of Note
Per PSA
Owner of NoteHolder of Note
Per PSA
(MERS)MortgageElectronic
RegistrationSystem
BankAs
Trustee(Trust)
TrusteeHolder of Note
TrustOwner of Note
Per PSA
BankAs
Custodian(Trust)
SwapNegotiable
Instruments
Certificates
CustodianHolder of Note
TrustOwner of Note
Per PSA
BankAs
Trustee(Trust)
TrusteeHolder of Note
TrustOwner of Note
Per PSA
NoteUCC
Article 3
DeedUCC
Article 9
Identity
MERS
Note
MOMLoan
MERSRegistered
Note Note Note Note
Lender 2(Seller
SecuritizedTrust)
Lender 3(Depositor
Trust)
BankAs
Trustee(Trust)
BankAs
Custodian(Trust)
BankAs
Trustee(Trust)
(MERS)MortgageElectronic
RegistrationSystem
(MERS)MortgageElectronic
RegistrationSystem
(MERS)MortgageElectronic
RegistrationSystem
Law firmLitigation
Assignor Assignor
AssigneeAssignee
Assignor
Assignee
LegalAction
Not RecordedPublic Records
Not RecordedPublic Records
Not RecordedPublic Records
Not RecordedPublic Records
Recorded Public RecordsFraudulent Filing
Bank XXX as Trustee for ZZZ Trust
Page 14 of 37 8/16/10
PromissoryNote
Lender 1Originator
Deed of Trust
PublicRecords
ObligorLender 2(Seller
SecuritizedTrust)
Lender 3(Depositor
Trust)
OwnerHolder
NegotiableInstrument
Owner of NoteHolder of Note
Per PSA
Owner of NoteHolder of Note
Per PSA
(MERS)MortgageElectronic
RegistrationSystem
BankAs
Trustee(Trust)Trustee
Holder of NoteTrust
Owner of NotePer PSA
BankAs
Custodian(Trust)
SwapNegotiable Instruments
Certificates
CustodianHolder of Note
TrustOwner of Note
Per PSA
BankAs
Trustee(Trust)Trustee
Holder of NoteTrust
Owner of NotePer PSA
NoteUCC
Article 3
DeedUCC
Article 9
Identity
MERS
Note
MOMLoan
MERSRegistered
Note Note Note Note
Lender 2(Seller
SecuritizedTrust)
Lender 3(Depositor
Trust)
BankAs
Trustee(Trust)
BankAs
Custodian(Trust)
BankAs
Trustee(Trust)
(MERS)MortgageElectronic
RegistrationSystem
(MERS)MortgageElectronic
RegistrationSystem
(MERS)MortgageElectronic
RegistrationSystem
Law firmLitigation
Assignor Assignor
AssigneeAssignee
Assignor
Assignee
LegalAction
Not RecordedPublic Records
Not RecordedPublic Records
Not RecordedPublic Records
Not RecordedPublic Records
Recorded Public RecordsFraudulent Filing
Bank XXX as Trustee for ZZZ Trust
MERS for Lenders and Assigns (Non Holder or Owner of the “Note”)
Page 15 of 37 8/16/10
First Horizon Home Loan Corporation
General Warranty Deed
AssignmentFirst Horizon Home Loan
toNovastar Mortgage, Inc.
AssignmentNovstar Mortgage, INC by
Saxon Mortgage by Attorney in FactTo
Bank of New York MellonAs successor Trustee
Novastar Mortgage Funding Trust Series 2005-1
First Horizon Home Loan Corporation
General Warranty Deed
AssignmentFirst Horizon Home Loan
toNovastar Mortgage, Inc.
7/29/2005
Novastar Mortgage, Inc.To Securitizer if not
Novastar
SecuritizerTo Depositor
Per Pooling and Servicing Agreement
DepositorTo BNYM as Trustee
BNYM as TrusteeTo Certificate Holders
Per Pooling and Servicing Agreement
AssignmentRecorded in Public Land
Records
AssignmentNot
Recorded in Public Land
Records
AssignmentNot
Recorded in Public Land
Records
AssignmentNot
Recorded in Public Land
Records
AssignmentNot
Recorded in Public Land
Records
UCC Assignment
Non ExecutedUCC Assignment
Actual UCC Assignment
ActualNon Valid
UCC Assignment
AssignmentRecorded in Public Land
Records
InvalidAssignmentRecorded in Public Land
Records
Certificate HoldersTo BNYM as Trustee
Per Pooling and Servicing Agreement
AssignmentNot
Recorded in Public Land
RecordsLaw Firm TakesTemporary Custody
HolderHolder in Due Course/Right of
Enforcement
Jurisdiction of the Court
DefaultOf Note
Obligor
Actual Assignments
Required Assignments
Non ExecutedUCC Assignment
Non ExecutedUCC Assignment
Non ExecutedUCC Assignment
Non ExecutedUCC Assignment
Valid Lien
Invalid Lien
Invalid Lien
Invalid Lien
Invalid Lien
Invalid Lien
Names Are Not Included to Protect the Innocent
Page 16 of 37 8/16/10
Issue of InstrumentPromissory Note
UCC 3-105
Originator(Lender 1)
ObligorHomeowner
Lender 2(Seller)
To FNMA)
Transfer of InstrumentUCC 3-203
Lender 3(FNMA)
Transfer of InstrumentUCC 3-203
Lender 4MBS
Collateral
Transfer of InstrumentUCC 3-203 Contractual Parties
Fannie Mae Guidelines
UCC 3-203TRANSFER OF INSTRUMENT
RIGHTS ACQUIRED BY TRANSFER
(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the
transferee any right of the transferor to enforce the instrument, including any right as a holder
in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder
in due course if the transferee engaged in fraud or illegality affecting the instrument.
MortgageServicer
NoticeAllegedDefaultObligor
NoticeAcceleration
Default
NoticeAcceleration
Default
LawFirm
Non-CompliantDocuments
JudicialForeclosure
Action
Non-Judicial
NUMBER 13-04-135-CVCOURT OF APPEALS
THIRTEENTH DISTRICT OF TEXASCORPUS CHRISTI B EDINBURG
FIRST NATIONAL ACCEPTANCE COMPANY,Appellant,
v.DEOLA BISHOP,
Appellee.On appeal from the 357th District Court
of Cameron County, Texas.O P I N I O N
Before Chief Justice Valdez and Justices Hinojosa and Yanez
Page 17 of 37 8/16/10
Issue of InstrumentPromissory Note
UCC 3-105
Originator(Lender 1)
ObligorHomeowner
Lender 2(Securitizer)
Transfer of InstrumentUCC 3-203
Lender 3(Depositor)
Transfer of InstrumentUCC 3-203
Lender 4(Trustee)
Transfer of InstrumentUCC 3-203 Contractual Parties
Pooling & Servicing Agreement
UCC 3-203TRANSFER OF INSTRUMENT
RIGHTS ACQUIRED BY TRANSFER
(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the
transferee any right of the transferor to enforce the instrument, including any right as a holder
in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder
in due course if the transferee engaged in fraud or illegality affecting the instrument.
MortgageServicer
NoticeAllegedDefaultObligor
NoticeAcceleration
Default
NoticeAcceleration
Default
LawFirm
Non-CompliantDocuments
JudicialForeclosure
Action
Non-Judicial
NUMBER 13-04-135-CVCOURT OF APPEALS
THIRTEENTH DISTRICT OF TEXASCORPUS CHRISTI B EDINBURG
FIRST NATIONAL ACCEPTANCE COMPANY,Appellant,
v.DEOLA BISHOP,
Appellee.On appeal from the 357th District Court
of Cameron County, Texas.O P I N I O N
Before Chief Justice Valdez and Justices Hinojosa and Yanez
Page 18 of 37 8/16/10
PromissoryNote
ObligorExecutes
PromissoryNote toObligee
SecurityInstrument
ObligorExecutesSecurity
Instrumentto
Obligee
RecordationStatutesPublic
Records
ContractualPooling
ServicingAgreement
Deed of TrustRecorded
Securities
ElectronicRegistration
MERSNon-Perfected Lien
BankCustodian
ForTrust
Obligee 5
Obligee 4Assigns
NoteTo
Obligee 5
E-RegistryUpdated
BankCustodian
ForTrust
Obligee 5
BankTrustee
ForTrust
Obligee 6
BankTrustee
ForTrust
Obligee 6
Obligee 4Assigns
NoteTo
Obligee 5
E-RegistryUpdated
LoanOriginatorObligee 1
HIDC
LoanOriginatorObligee 1
SellerSecuritizer
OfTrust
Obligee 2
SellerSecuritizer
OfTrust
Obligee 2
DepositorTo
TrustObligee 3
DepositorTo
TrustObligee 3
Obligee 2Assigns
NoteTo
Obligee 3
Security InstrumentSeparated From NoteRegistered E-Registry
BankTrustee
ForTrust
Obligee 4
Obligee 3Assigns
NoteTo
Obligee 4
E-RegistryUpdated
BankTrustee
ForTrust
Obligee 4
Note’sSecurity Instrument
Perfected Lien
UCCArticle
3
UCCArticle
9Recordin
gStatutes
Electronic Graphic Image
Paper Document
Electronic ConversionPaper to Electronic
E-Sign/UETANegotiable Instrument
Governed By UCC Art 3Excluded in E-Sign/UETA
Security InstrumentAllowable
ScannedNote
Not ValidUCC
ScannedSecurity
InstrumentAssignmentOf
Note
Notice OfAssigned Lien
Holder
E-RegistryUpdated
E-RegistryUpdate
AssignmentOf
NoteRegistryUpdate
AssignmentOf
NoteRegistryUpdate
AssignmentOf
NoteRegistryUpdate
AssignmentOf
NoteRegistryUpdate
MortgageServicer
ObilgorCourts
DefaultObligee
AffidavitsBased On
ReviewElectronicRecords
VerificationComputerGenerated
Data
FalseVerification
Non ComplianceRecordationContractual
PoolingServicing
Agreement
Page 19 of 37 8/16/10
©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Page 1
“AGNON / DODID” From the End to the Beginning
By J. McGuire
Closing
• We begin with the loan originator immediately after closing. The loan originator has taken possession of many documents of which only three (3) are required to be followed through to the securitization process. These three (3) documents are the “Warranty Deed,” the Paper Promissory Note and the Paper Security Instrument (Mortgage, Deed of Trust, Security Deed).
• The Warranty Deed contains the information that transfers the Title of the property from the
seller to the buyer (Homeowner). Title to the property is required to offer the property as security in the security instrument as collateral for the paper promissory note. The Warranty Deed is required to be filed in Public Records. The Warranty Deed is not governed under the Uniform Commercial Code or states’ equivalence and would be allowable under “eSign” to be filed in electronic form.
• The Paper Promissory Note: “a writing” in tangible form identifying an indebtedness
governed by the Uniform Commercial Code or the states equivalence identifying the obligor and obligee. If the Paper Promissory Note is to be a “Secured” indebtedness, the Security Instrument is also identified within the Paper Promissory Note. The Paper Promissory Note is governed by the Uniform Commercial Code Article 3 or the states’ equivalence, and “eSign”--15 USC 7003—which clearly excludes items governed by the Uniform Commercial Code Article 3 or the states equivalence and as such the indebtedness can be only in paper tangible form.
• The Security Instrument: if to be governed by the Uniform Commercial Code or the states
equivalence, the Security Instrument needs to be “a writing” in tangible form. If the Security Instrument is to be governed by the Uniform Commercial Code Article 9 or the states equivalence and “eSign”, 15 USC 7003 clearly excludes items governed by the Uniform Commercial Code Article 9 or the states equivalence then such security instrument can only be in paper tangible form.
• The Paper Promissory Note and the Security Instrument as combined and offered is a tangible interest in “Real Property.”
Step X – Scanning, Storage, Destruction and Filing
• The Paper Promissory Note and the Security Instrument are scanned into an electronic digitized graphic package and at the same time the data from both sets of documents is scraped of data and this data is placed into an electronic data file and combined with the electronic version of the promissory note and security instrument along with all other closing documents which then is identified as the “Mortgage Loan Package”.
• This “Mortgage Loan Package” would be an intangible interest in “Personal Property,” if it
were fully supported by law.
• As future legal actions were unanticipated, the paper documents were either placed in storage, (Custodial and Non-Custodial Custody) or deliberately destroyed.
Page 20 of 37 8/16/10
©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Page 2
• The “Electronic Digitized Mortgage Loan File” is now falsely represented as the legal “Mortgage Loan Package.
• The electronic version of the Warranty Deed is electronically filed in Public Records; as this Warranty Deed is allowed to be in electronic form under “eSign,” the filing in Public Records is a lawful action.
• The electronic version of the Security Instrument is electronically filed in Public Records. If the obligee attempts to apply UCC laws of perfection to support legal claims within the security instrument then this filing would be unlawful. If the obligee uses the laws of local jurisdiction to support perfection the filing would be lawful.
o (Reader Note: Perfection of the Lien and Perfection for Priority are “not” one in the same.)
• If MERS is involved, registration on the MERS system is required, and when this registration
occurs, an 18 digit Mortgage Identification Number “MIN” is created. The first seven (7) digits identify the registering lender and the last digit is a checksum number.
The Paper Sale (In this New World of Electronic Securitization does not occur)
• The “Loan Originator,” (Assignor), offers the paper loan package under cover of a Bailee’s Letter to a perspective buyer. The recipient, (Assignee), of the Bailee’s Letter then must either accept the offering and tender funds and takes possession of the loan package, or refuse the offering in which case the Assignor retains ownership of the loan package. (Note: the Assignor could make the Note payable in blank and upon the Assignee’s accepting the Note the Assignee could fill in the blank assignment on the Note which would complete the negotiation.)
• Assignee, upon acceptance of the paper loan package, would file a “Notice of Assignment” in Public Records to show the negotiation of the Paper Promissory Note, thereby transferring perfected lien rights from the Assignor to the Assignee, and as such a continuous perfection of lien rights is maintained. Failure to file this financing statement (Notice of Assignment) would allow the perfection of the lien to expire and thus render the Security Instrument to a “Nullity.”
The First Electronic Sale/Assignment (Investment Vehicle as Example, Fannie/Freddie Similar)
• The “Loan Originator,” (Assignor), offers the electronic loan package to a perspective buyer or a prearranged line of credit lender. The Recipient, (Assignee, Seller/Securitizer of the Investment Vehicle), of the electronic loan package then must either accept the offering and tender funds and takes control of the electronic loan package, or refuse the offering in which case the Assignor retains control of the electronic loan package.
o (Note: as the electronic loan package is registered in the MERS Registry, there is no
physical transfer of the electronic loan package. The MERS Registry is updated as to who has control and ownership rights of the electronic digitized file of the non-lawful and intangible form of the electronic promissory note {eNote}.)
• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records
as such a filing would be unlawful as there is no law that supports an electronic negotiation of an electronic promissory note (eNote).
Page 21 of 37 8/16/10
©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Page 3
The Second Electronic Sale/Assignment
• The “Seller/Securitizer of the Investment Vehicle,” (Assignor), sells/assigns the electronic loan package to the buyer, (Depositor of the Investment Vehicle). The recipient, (Assignee, Depositor of the Investment Vehicle), of the electronic loan package under the terms of the trust accepts the transfer and takes control of the electronic loan package.
o (Note: as the electronic loan package is registered in the MERS Registry, there is no physical transfer of the electronic loan package. The MERS Registry is updated as to who has control and ownership rights of the electronic digitized file of the non-lawful and intangible form of the electronic promissory note {eNote}.)
• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records
as such a filing would be unlawful as there is no law that supports an electronic negotiation of an electronic promissory note (eNote).
o (The author has noted several Qui Tam suits being filed claiming the local
governments have been defrauded by the failure to file these assignments and tender funds into public records. The suits making these charges are without merit.)
o (It is not uncommon to find in Public Records a “Notice of Assignment” filed
reflecting a transfer of lien rights from the Original Assignor to a 3rd subsequent Assignee(Trustee or Mortgage Servicer). In this scenario the perfection of lien rights “Perfected Chain of Title” does not match the match the “Chain of Negotiation” of the Paper Promissory Note, and, as such, proves the Paper Promissory Note and the Security Instrument are now bifurcated, which renders the Security Instrument a “Nullity.” These filings in public records are fraud upon public records.)
The Third Electronic Sale/Assignment
• The “Depositor of the Investment Vehicle,” (Assignor), sells/assigns the electronic loan package to the (Trustee of the Investment Vehicle). The recipient, (Assignee, Depositor of the Investment Vehicle), then takes control of the electronic loan package. The “Depositor of the Investment Vehicle,” in compliance with the Investment Trust’s documents, takes control of the Investment Trust’s Electronic Certificates in exchange for selling/assigning the electronic loan package to the Trustee of the Investment Vehicle for the benefit of the Certificateholders (The Swap).
o (Note: as the electronic loan package is registered in the MERS Registry, there is no physical transfer of the electronic loan package. The MERS Registry is updated as to who has control and ownership rights of the electronic digitized file of the non-lawful and intangible form of the electronic promissory note {eNote}.)
• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records
as such a filing would be unlawful as there is no law that supports an electronic negotiation of an electronic promissory note (eNote).
The Fourth Electronic Sale/Assignment
• The “Trustee of the Investment Vehicle,” (Assignor), sells/assigns the electronic loan package to the (Custodian of the Investment Vehicle for the benefit of the Certificateholders). The Recipient, (Assignee, Custodian of the Investment Vehicle for the benefit of the Certificateholders), takes control of the electronic loan package.
• The “Depositor of the Investment Vehicle,” in compliance with the Investment Trust
documents, takes control of the Investment Trust’s Certificates, in exchange for selling/assigning the electronic loan package to the Trustee of the Investment Vehicle for the benefit of the Certificateholders who then are in control of the electronic mortgage package.
Page 22 of 37 8/16/10
©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Page 4
o (Note: as the electronic loan package is registered in the MERS Registry, there is no physical transfer of the electronic loan package. The MERS Registry is updated as to who has control and ownership rights of the electronic digitized file of the non-lawful and intangible form of the electronic promissory note {eNote}.)
• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records
as such a filing would be unlawful as there is no law that supports an electronic negotiation of an electronic promissory note (eNote).
Non Holder in Due Course Alleges Default (Trustee/Mortgage Servicer)
• “Trustee of the Investment Vehicle/Mortgage Servicer” declares default:
• Numerous actions of fraud are readily identifiable.
• As noted in the four (4) electronic negotiations of the electronic loan package to securitization, there is a lack of supporting law to allow electronic negotiation. Only the Holder of the “Paper Promissory Note” entitled in the indebtedness has a right to collect payments.
• Lost Note Affidavits based on Electronic Records are Hearsay
• Introduction of fraud into the Securities Market
• Fraudulent creation of assignments in attempt to transfer lien rights from Originator to 3rd or 4th subsequent purchaser bypassing 1st and 2nd purchasers resulting in fraudulent filing in public records.
• Many more.
Page 23 of 37 8/16/10
LoanOriginator
CustodianInvestment Trust
Certificates
SubServicer
SpecialServicer
Law Firm
Investor
MiscFees
LegalFees
Borrower
UnlawfulElectronic
Negotiation DisbursementFees
Step X
ScanCopy
DestroyVault
Non-Perfected Lien
UnlawfulElectronic
Negotiation
DepositorInvestment Trust
SellerInvestment Trust
MERSNominee/Beneficiary
PublicRecords
MERSRegistry
Custodian
InvestmentCreation Fee
UnderBanks
ControlUnlawfulElectronic
Conversion
ToLawFirm
TrusteeInvestment Trust
MasterServicer
UnlawfulElectronic
Negotiation
TrusteeInvestment Trust
Copyright 2010 j.mcguire P O Box 1352, Bedford, Texas 76095-1352 Page 24 of 37 8/16/10
© Copyrighted 2010 j.mcguire P O Box 1352, Bedford, Texas, 76095-1352
Security InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note
Warranty DeedTitle To Property
Electronic
Paper
Security InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Warranty DeedTitle To Property
Step x
ScanCopy
Paper DocumentsVaulted withCustodian or
Destroyed
Electronic
Paper
Seller/SecuritizerInvestment Vehicle
Special Purpose VehicleInvestment Trust
Security InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note
DepositorInvestment Vehicle
Special Purpose VehicleInvestment Trust
Security InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note
MERS RegistryTracks Alleged
OwnershipElectronic Data
Notice of Assignment of Lien Rights Filed Public Records for Perfection
Reflects Negotiation of the Paper Note
TrusteeInvestment Vehicle
Special Purpose VehicleInvestment Trust
Security InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note
Custodian (Certificateholders)Investment Vehicle
Special Purpose VehicleInvestment Trust
Security InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note UnlawfulElectronic
Negotiation
Law Firm
HouseNon-Perfected
Lien
HousePerfected Lien
REOProperty
TheftOf HouseBy Bank
UnlawfulElectronic
Negotiation
UnlawfulElectronic
Negotiation
UnlawfulElectronic
NegotiationPaper
PaperDocumentsRetrieved
FromOriginal
CustodianTransferred to Law Firm
Paper
Paper
Paper
Page 25 of 37 8/16/10
Fannie Mae/Freddie Mac
© Copyrighted 2010 j.mcguire P O Box 1352, Bedford, Texas, 76095-1352
Security InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note
Warranty DeedTitle To Property
Electronic
Paper
Security InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Warranty DeedTitle To Property
Step x
ScanCopy
Paper DocumentsVaulted withCustodian or
Destroyed
Electronic
Paper
3rd Party PurchaserBank
Warehouse LenderSecurity InstrumentDeed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note
Fannie MaeFreddie MacSecurity Instrument
Deed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note
MERS RegistryTracks Alleged
OwnershipElectronic Data
Notice of Assignment of Lien Rights Filed Public Records for Perfection
Reflects Negotiation of the Paper Note
Mortgage Backed SecurityPrincipal Only SplitInterest Only Split
(Non-Tranche Splits) Security Instrument
Deed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note
Custodian (Certificateholders)Mortgage Backed SecuritiesSecurity Instrument
Deed of Trust-Mortgage-Security Deed
Promissory NoteIndebtedness
Security Instrument
Electronic Note UnlawfulElectronic
Negotiation
Law Firm
HouseNon-Perfected
Lien
HousePerfected Lien
REOProperty
TheftOf HouseBy Bank
UnlawfulElectronic
Negotiation
UnlawfulElectronic
Negotiation
UnlawfulElectronic
NegotiationPaper
PaperDocumentsRetrieved
FromOriginal
CustodianTransferred to Law Firm
Paper
Paper
Paper
Loan Originator
Page 26 of 37 8/16/10
(Lop Sided)
Promissory NoteSecurity Instrument
© 2010 j.mcguire
Loan Originator Creates E-NOTE
Alleged DefaultLaw Firm
Vault-DestroyPaper Note
PaperCustodian
MERSRegistry
Assignment E-NOTESeller/Securitizer - Investment Vehicle
MERS – RegistryBeneficial Ownership Electronic Update
BeneficialOwnershipAssigned
Public RecordsPerfection (MERS)
In Lieu
Assignment E-NOTEDepositor - Investment Vehicle
BeneficialOwnershipAssigned
BeneficialOwnershipUpdated
LENDERHolder in Due Course
Bifurcation
MERS – RegistryBeneficial Ownership Electronic Update
Assignment E-NOTETrustee - Investment Vehicle
MERS – RegistryBeneficial Ownership Electronic Update
Assignment E-NOTECustodian - Investment Vehicle
Benefit Certficateholders
MERS – RegistryBeneficial Ownership Electronic Update
BeneficialOwnershipAssigned
BeneficialOwnershipAssigned
Paper Documents RetrievedLacks Proper IndorsementsContinuous Lien Perfection
Public RecordsHIDC Equitable Action on Note
Security Instrument - Nullity(Money Judgment – No Power of Sale Clause)
Courts
Lie, Lie & LieTo WIN!!!
Paper Never MovesNo Bailee’s Letters
Page 27 of 37 8/16/10
“Buyer in ordinary course of business” Uniform Commercial Code
The author’s favorite: "Buyer in ordinary course of business" means a person that buys goods in good faith,..” Better polish your boots on this one. The banks are not the purchaser; the newly created Investment Trust Vehicle was the purchaser. The banks only operate as underwriters, trustees and servicers of these newly created Investment Trust Vehicles.
PART 1. GENERAL PROVISIONS
§ 1102. Scope of Article
This article applies to a transaction to the extent that it is governed by another article of [the Uniform Commercial Code].
§ 1108. Relation to Electronic Signatures in Global and National Commerce Act
This article modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., except that nothing in this article modifies, limits, or supersedes Section 7001(c) of that Act or authorizes electronic delivery of any of the notices described in Section 7003(b) of that Act.
ESIGN ACT: TITLE 15 > CHAPTER 96 > SUBCHAPTER I > § 7003 Specific exceptions1 (a) Excepted requirements The provisions of section 7001 of this title shall not apply to a contract or other record to the extent it is governed by— (1) a statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts; (2) a State statute, regulation, or other rule of law governing adoption, divorce, or other matters of family law; or (3) the Uniform Commercial Code, as in effect in any State, other than sections 1–107 and 1–206 and Articles 2 and 2A.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION
§ 1‐201. General Definitions.
(a) Unless the context otherwise requires, words or phrases defined in this section, or in the additional definitions contained in other articles of [the Uniform Commercial Code] that apply to particular articles or parts thereof, have the meanings stated.
(b) Subject to definitions contained in other articles of [the Uniform Commercial Code] that apply to particular articles or parts thereof:
(9) "Buyer in ordinary course of business" means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A 1 http://www.law.cornell.edu/uscode/15/7003.html
Page 28 of 37 8/16/10
person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Article 2 may be a buyer in ordinary course of business. "Buyer in ordinary course of business" does not include a person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
Again, the author’s favorite, "Buyer in ordinary course of business" means a person that buys goods in good faith,..” Better polish your boots on this one. The banks are not the purchaser; the newly created Investment Trust Vehicle was the purchaser. The banks only operate as underwriters, trustees and servicers of these newly created Investment Trust Vehicles. (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. What is needed to be understood is that the original “Wet Ink” negotiable instrument is not the instrument that was negotiated/assigned/transferred to the newly created Investment Vehicle. The creators of the Investment Trust Vehicle assigned/transferred an electronic negotiable instrument, which lacks supporting laws to exist. This electronic negotiable instrument was created by scanning the original “Wet Ink” negotiable instrument, and this electronic digitized copy was to be called the “authoritative copy” of the “transferable record.” It is this “authoritative copy” that was electronically assigned/transferred in book entry form. In actuality, the registry that identifies the “authoritative copy” was updated to reflect who had beneficial ownership rights of the “authoritative copy”. Since there was no negotiation of the original “Wet Ink” negotiable instrument to the newly created Investment Trust Vehicle, the Investment Trust Vehicle never became the holder or holder in due course of the original “Wet Ink” negotiable instrument. Of particular note: if the original “Wet Ink” negotiable instrument by chance was not destroyed, then a high probability exists that the original lender vaulted the documents and the same registry, (MERS), that identified the ownership of the “authoritative copy” will also identify the custodian holding the original “Wet Ink” and the identity of the entity that has beneficial ownership rights of the documents being held by this custodian.
PART 3. ENFORCEMENT OF INSTRUMENTS
§ 3‐301. PERSON ENTITLED TO ENFORCE INSTRUMENT.
"Person entitled to enforce" an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3‐309 or 3‐418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
As the newly created Investment Trust Vehicle has only ownership right to the “authoritative copy” and beneficial ownership right to the original non-negotiated “Wet Ink” negotiable instrument they have not met the definition of “Holder”.
Page 29 of 37 8/16/10
§ 3‐302. HOLDER IN DUE COURSE.
(a) Subject to subsection (c) and Section 3‐106(d), "holder in due course" means the holder of an instrument if:
(1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
What the courts do not see is that the electronic negotiable instrument does not bear apparent evidence of forgery or alteration; it just cannot legally exist under current laws.
(2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3‐306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3‐305(a).
In “good faith”… have to re‐polish the boots on this one as there is absolutely no “good faith” where there is an intentional act of not following the written laws .
(b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization…
The author was required to redirect attention back to the negotiable instrument; this document does not dwell into the issues of bifurcation of the security instrument from the negotiable instrument or about the perfection/continuous perfection of the security instrument.
Time to polish the boots and glue them on, this dance is going to get deep.
Shinola was immortalized in colloquial English with the phrase, “You don't know shit from Shinola,” which first became widely popular during World War II.2
Maybe one day law enforcement will learn the difference.
2 http://en.wikipedia.org/wiki/Shinola
Page 30 of 37 8/16/10
Loan Originator
Assignor Electronic Note
Real Property
Tangible Custodian
Personal Property
Deed of Trust
Intangible
Electronic Deed of Trust
Electronic Note
Paper Promissory Note
Deed of TrustRegistered
MERS System
MERS as Nominee/Beneficiary Under
Deed of TrustInvalid Perfection
If FiledPublic Records
Step XScan/Copy
Destroy
Deed of Trust
Paper Promissory Note
If Vaulted
MERS RegistryBeneficial Ownership Electronic Note
Ownership Rights to Custodial Documents
Investment Trust VehicleSeller – Assignee of Electronic Note
Assignor Electronic Note
Personal Property
Intangible
Electronic Deed of Trust
Electronic Note
AssignTransfer
BanksAs
Underwriter Investment TrustTrusteeServicer
Master Servicer
Non UCC Negotiation Tangible Paper NoteMERS Registry Updated
Seller Beneficial Owner Electronic NoteSeller Rights to Custodial Documents
Conversion FromPaper to Electronic
Lacks Supporting LawESIGN & UETA
ExcludesArticles 3 & 9
© Copyrighted j.mcguire P O Box 1352, Bedford, Texas 76095-1352
Charts for “Buyer in Due Course”
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MERS Registry UpdatedBeneficial Ownership Electronic Note
Ownership Rights to Custodial Documents
Investment Trust VehicleSeller – Assignee of Electronic Note
Assignor Electronic Note
Personal Property
Intangible
Electronic Deed of Trust
Electronic Note
Non UCC Negotiation Tangible Paper Note
© Copyrighted j.mcguire P O Box 1352, Bedford, Texas 76095-1352
Investment Trust VehicleDepositor – Assignee of Electronic Note
Assignor Electronic Note
Personal Property
Intangible
Electronic Deed of Trust
Electronic Note
Non UCC Negotiation Tangible Paper Note
Investment Trust VehicleTrustee – Assignee of Electronic Note
Assignor Electronic Note
Personal Property
Intangible
Electronic Deed of Trust
Electronic Note
MERS Registry UpdatedBeneficial Ownership Electronic Note
Ownership Rights to Custodial Documents
MERS Registry UpdatedBeneficial Ownership Electronic Note
Ownership Rights to Custodial Documents
Assign/Transfer
Assign/Transfer
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©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Revision 1 Page 1
“eFraud” eNotes – eClosing – eMortages – eSign
Perfection and Loss of Perfection (Security Instrument) By J. McGuire
The collection rights given in the Paper Promissory Note, if transferred, assigned, or sold to a Mortgage Backed Security, must be a Negotiable Instrument, must be “in writing” (tangible form) identifying an indebtedness which is governed by the Uniform Commercial Code Article 3: Negotiable Instruments or the states equivalence. This Paper Promissory Note by itself is an “Unsecured” indebtedness. Where the lender requires a Security Instrument to be part of the loan package, this Security Instrument states the property is to be used as collateral for the repayment of the indebtedness noted in the Paper Promissory Note. This Security Instrument contains language that stating that if the indebtedness, the lender, as the secured party, (Holder in Due Course with rights to the Paper Promissory Note), by the authority granted in the Security Instrument, could foreclose and sale the property to satisfy the indebtedness. When the Paper Promissory Note is accompanied by a Security Instrument such indebtedness is considered to be a “Secured” indebtedness. The “Secured” indebtedness will survive through a bankruptcy action, whereas an “Unsecured” indebtedness may or may not survive through a bankruptcy action. One has to wonder how a large corporation can emerge from bankruptcy in a matter of months with a lot of indebtedness gone; he who has a secured loan and he who does not is the answer. Example, GM: how many debts were “Secured” and how many were “Unsecured”? The banks’ loans usually are “Secured” while all others are “Unsecured.” Banks get paid and stockholders and investors get the empty baby bottle. Consider this: the banks generally write all the contracts ‐ as such, the banks will write the contracts to protect themselves while leaving the losses to all others. Under the Uniform Commercial Code Article 9, there is an automatic perfection of lien rights that is created when the Security Instrument attaches to the Paper Promissory Note by the signing of all documents at closing. Of note: this automatic perfection is limited in time and to convert this temporary perfection into a permanent perfection, local laws of jurisdiction must be followed. So it is not uncommon to find the Security Instrument filed in Public Records to convert a temporary perfection of lien rights into a permanent perfection of lien rights. The Security Instrument represents the “lien.” In the days of paper, when the Paper Promissory Note was sold/assigned/transferred/negotiated to a subsequent 3rd party purchaser,
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©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Revision 1 Page 2
endorsements were noted on the Paper Promissory Note, which under the UCC completed the negotiation; also, a “Notice of Assignment” was filed by the subsequent 3rd party purchaser in Public Records, which notices transfer of lien rights to the subsequent 3rd party purchaser, and, as such, continuous perfection, “Perfected Chain of Title,” was maintained of lien rights in Public Records. Under the UCC, Perfection and Perfection for Priority have different meanings.
§ 9301. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS.1
Except as otherwise provided in Sections 9303 through 9306, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:”
How do you create an eNote from a Paper Promissory Note? Scan it. How do you create an eNote at an eMortgage closing? Sign it electronically. A Negotiable Instrument is governed by the Uniform Commercial Code Article 3 and the states equivalence. The UCC allows the Negotiable Instrument to be only in tangible paper form. The banks have been alleging the eSign Act allows for the existence of an eNote (Transferable Record) as being a negotiable instrument under the UCC. As this eNote Transferable Record is not in paper tangible form, it does not meet the UCC requirements to be a negotiable instrument. In this day of electronics, it is this eNote that is transferred/assigned to a subsequent 3rd party, 4th party, or 5th party, on up to the securities market or Fannie and Freddie. Note: the author did not state that the note was negotiated up to any party. As these transfers/assignments are in electronic form there has been no negotiation of any note, “Paper or Electronic.” In fact, an eNote could never be negotiated under current laws and as such no party other than the originating lender could claim to be “Holder In Due Course.” For the subsequent 4th or 5th party to claim they have a valid Security Instrument to exercise the “Power of Sale Clause” is an absolute falsehood. The legal counsels for the subsequent 4th or 5th parties then attempt to foreclose by filing fraudulent “Notices of Assignment” in Public Records showing “negotiation” of an eNote; eNotes lacks supporting laws. The fraudulent filings upon Public Records are the “Ball & Chain” that is misrepresented to provide the illusion that they have legal authority.
1 http://www.law.cornell.edu/ucc/9/article9.htm#s9‐301
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Interest In Real Property
Loan Origination
U.C.C. – Article 9 ‐Secured Transactions;Sales of Accounts and Chattel Paper
Part 1. Short Title, Applicability and Definitions
§ 9-104. Transactions Excluded From ArticleThis Article does not apply
(j) except to the extent that provision is made for fixtures in Section 9-313, to the creation or transfer of an interest in or lien on real estate, including a
lease or rents thereunder - As amended in 1972
[Subpart 2. Applicability of Article] [Table of Contents]§ 9‐109. SCOPE.
(d) [Inapplicability of article.]This article does not apply to:
(11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:(A) liens on real property in Sections 9‐203 and 9‐308;
§ 9‐308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION.(d) [Supporting obligation.]
Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.
© Copyright 2005 by The American Law Institute and the National Conference of Commissioners on Uniform State Laws; reproduced, published and distributed with the permission of the Permanent Editorial Board for the Uniform Commercial Code for the limited purposes of study, teaching, and academic research.
Interest InPersonal Property
UCC
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Perfected Security InstrumentFollows The Paper Negotiated Promissory Note
Page 35 of 37 8/16/10
Interest In Real Property
Loan Origination
U.C.C. – Article 9 ‐Secured Transactions;Sales of Accounts and Chattel Paper
Part 1. Short Title, Applicability and Definitions
§ 9-104. Transactions Excluded From ArticleThis Article does not apply
(j) except to the extent that provision is made for fixtures in Section 9-313, to the creation or transfer of an interest in or lien on real estate, including a
lease or rents thereunder - As amended in 1972
[Subpart 2. Applicability of Article] [Table of Contents]§ 9‐109. SCOPE.
(d) [Inapplicability of article.]This article does not apply to:
(11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:(A) liens on real property in Sections 9‐203 and 9‐308;
§ 9‐308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION.(d) [Supporting obligation.]
Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.
© Copyright 2005 by The American Law Institute and the National Conference of Commissioners on Uniform State Laws; reproduced, published and distributed with the permission of the Permanent Editorial Board for the Uniform Commercial Code for the limited purposes of study, teaching, and academic research.
Interest InPersonal Property
UCC
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UCC
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Assigned - Perfected Security InstrumentDoes Not Follow The Paper Negotiated Promissory Note
Page 36 of 37 8/16/10
Interest In Real Property
Loan Origination
U.C.C. – Article 9 ‐Secured Transactions;Sales of Accounts and Chattel Paper
Part 1. Short Title, Applicability and Definitions
§ 9-104. Transactions Excluded From ArticleThis Article does not apply
(j) except to the extent that provision is made for fixtures in Section 9-313, to the creation or transfer of an interest in or lien on real estate, including a
lease or rents thereunder - As amended in 1972
[Subpart 2. Applicability of Article] [Table of Contents]§ 9‐109. SCOPE.
(d) [Inapplicability of article.]This article does not apply to:
(11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:(A) liens on real property in Sections 9‐203 and 9‐308;
§ 9‐308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION.(d) [Supporting obligation.]
Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.
© Copyright 2005 by The American Law Institute and the National Conference of Commissioners on Uniform State Laws; reproduced, published and distributed with the permission of the Permanent Editorial Board for the Uniform Commercial Code for the limited purposes of study, teaching, and academic research.
Scanned ToElectronic
Interest InPersonal Property
UCC
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3N
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onEl
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Pro
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sory
Not
eLa
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Sup
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tin
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UCC
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Non-Perfected Security InstrumentDoes Not Follow The Electronic Negotiated Promissory Note
Page 37 of 37 8/16/10