THERE IS NO CONFLICT BETWEEN ARTICLE 3 AND ARTICLE 9 OF UCC: THE COURTS ARE JUST PLAIN WRONG

Nov 19, 2021

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CASE DECISIONS ARE NOT SCRIPTURE. But they are precedent and you can expect that once a decision is rendered by an appellate court in a specific jurisdiction all the lower courts in that jurisdiction will most likely follow the reasoning and application of the law in that appellate decision. This fact, though, does not make the original decision correct. Dredd Scott was a famously wrong decision by the Supreme Court of the United States. And a correct decision does not automatically mean that lower courts will apply — see the Jesinoski decision on TILA rescission.

If you read my blog article on the subject it will clear up my view. APPLYING THE UCC IN FORECLOSURES

There’s a difference between what the courts are doing and what they should be doing.

In a nutshell, the law in every jurisdiction says that it is possible to obtain a judgment on a note without owning the underlying obligation and therefore without alleging financial injury to the claimant.

This is a huge exception to the rules governing every civil case. It might be unconstitutional but it is universally accepted as the exception to the rule.

I agree that the courts have extended this exception to the enforcement of security instruments like mortgages. But in every jurisdiction, that exception is actually banned by their own statute.

There is an age-old expression that you can pick up one end of the stick without picking up the other.

They are using the exception based upon the state legislature adopting the uniform commercial code.

Article 3 of the uniform commercial code provides the exception.

Article 9 specifically bars the use of that exception in the enforcement of security instruments. §203.

This is not the first time the courts of general jurisdiction have gotten things wrong and it won’t be the last. That is why we have higher courts and legislatures to overrule what the general courts are doing.

The plain fact is that the loan account is eliminated at or near the time of creation of the homeowner transction. This is true in all securitization schemes and let me remind you that nobody anywhere has ever contradicted this statement. The reason is that money came in but was labeled as something otehr than repayment of loan or return of capital. But the indisputable fact is that money came in covering not only the cost of doing business with the homeowner but in geometrically larger ums as revenue.

The fact that investment banks did not record it as payment of a loan account does not mean that they didn’t get the money. The entire point of securitization for the investment banks was for them to enter the lending marketplace without ever making a loan — i.e., without ever disclosing their presence and without any risk of loss. The fact taht hoemwoenrs inteded to get a loan does not mean that is what theyr eceived. At some point — contemprneous with the “cliosing” the transction was in substance strictly converted from what it appeared to be — a loan —- to a payment to homeowners for launching the sale of securities.

A loan without a lender is not a loan. A loan without any risk of loss is not a loan transction.