How Does the Debt Get Transferred?

Basic Black Letter law: A debt can only be transferred by the owner of the debt. The owner of the debt may use agents or intermediaries to accomplish the transfer of the debt. If an intermediary executes a document of transfer without reference and identification of the owner of the debt, the document has potentially fatal defects.

Parole evidence may be admitted, upon discretion of a court of competent jurisdiction. But in the end, the party claiming authority to enforce the debt in a foreclosure of the mortgage or deed of trust must prove that it is doing so on behalf of the owner of the debt.

The simplest way of doing this is by alleging or asserting the name of the owner of the debt and the fact that the enforcer is representing the owner of the debt. In the absence of such allegation or assertion it is more likely than not that the enforcer is not representing the owner of the debt and therefore has no authority to enforce the foreclosure.

Promissory notes may be enforced without ownership of the debt. Mortgages and deeds of trust cannot. Article 9 of the UCC as adopted by all 50 states as their state law requires that the debt be owned or purchased for value as a condition precedent to the right of the claimant to enforce a mortgage through foreclosure.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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The courts are hiding the issue but there is full consensus on the fact that a mortgage without ownership of the debt is useless. If you analyze the decisions it is always there. But the courts are creative in coming to the conclusion that the transfer of ownership of the debt MUST have occurred (even if it didn’t).

They are bridging that divide by making some legal presumptions like “why execute the assignment of mortgage if you were not transferring the debt?” This of course ignores the question of whether (1) the assignor owned the debt (2) the assignor also specifically referenced transfer of the debt either in the assignment of mortgage or in an indorsement on the note.

I have already explained in many different ways that the ownership of the debt is completely dependent upon actual payment of value and the assumption of the risk of nonpayment.  And I have often explained that the last person in the fictitious chain used by enforcers is virtually never the owner of the debt nor an authorized representative of the owner of the debt.

The rule is this: At some point in the fictitious chain, payment was not made because the loan was already sold. This could be as early as before the loan “Closing” to as late as the most recent assignment of mortgage. Note as well that where assignment of mortgage is abandoned at trial the case ceases to become a foreclosure case and converts solely to an action for damages for nonpayment on the note.

Transfer of the note is evidence of transfer of the debt. The matter asserted is that the debt was transferred. If the transferor of the note actually owned the debt, the evidence of transfer of the debt becomes fairly conclusive. But without evidence showing that the transferor owned the debt, no legal presumption should arise. And if the maker of the note challenges (denies) the transfer of the debt, the burden is on the enforcer to establish a chain of evidence starting with the owner of the debt. One way to put this in contention is simply denying that the note is held or owned by the enforcer which makes them prove it. In many cases the enforcer ahs been successful at fabricating a new “original.”

Tags: enforcement of mortgage, enforcement of note, transfer of debt, TRUTH, UCC Article 3, UCC article 9
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