UCC ARTICLE 9 EXPLAINED: YOU MUST HOLD AND OWN THE OBLIGATION TO FORECLOSE

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“Appellants contend that the note necessarily accompanies an assignment of the mortgage. Actually, it is the converse that is true; the mortgage is incident to the obligation which it secures and ‘goes with [ownership of] the note.’ Hill v. Favour, 52 Ariz. 561, 568, 84 P.2d 575, 578 (1938).”

SEE LETTER TO AZ ATTORNEY GENERAL RE VASQUEZ CERTIFIED QUESTION

SEE X A – UCC DRAFT REPORT ASSIGNMENT NOTE AND DOT

FROM A LETTER BY RON RYAN, ESQ., TUCSON AZ TO ATTORNEY GENERAL HORNE

This refers to the impact of Article 9 to the transfer of security interests in real estate incident to the sale of promissory notes, as brought home perfectly by the extremely timely March 29, 2011, Draft Report of the Permanent Editorial Board on the UCC Rules Applicable to the Assignment of Mortgage Notes and to the Ownership and Enforcement of Those Notes and the Mortgages Securing Them (the “Report”), a copy of which is attached hereto.

Being the Holder of the Note does not carry the security interest with it. Article 9 of the UCC governs in cases involving the sale of Notes [it is actually the debt or the Loan that is sold, while the Note is only evidence of the debt] secured by real estate. These Article 9 provisions cannot be avoided under any circumstances as it trumps all other law and agreements between the parties.

The Report makes it clear that OWNERSHIP OF THE NOTE AND LOAN is required to have a security interest. It specifically states that there is no security interest unless the party purchased the Loan from the party that previously owned it, and that this sale was made pursuant to a special writing that stated that the purchase of the Note included the security interest in real estate represented by the deed of trust. THERE IS A SPECIFIC PROVISION PERTAINING TO THE RECORDING OF DOCUMENTS NECESSARY TO FORECLOSE IN NON- JUDICIAL FORECLOSURE STATES.

The Report makes it clear that OWNERSHIP OF THE NOTE AND LOAN is required to have a security interest. It specifically states that there is no security interest unless the party purchased the Loan from the party that previously owned it, and that this sale was made pursuant to a special writing that stated that the purchase of the Note included the security interest in real estate represented by the deed of trust.

ARS § 47-9607(b)(1), governs the ability to hold a non-judicial foreclosure, and it precisely defines the necessary documents to be recorded. The Claimant cannot record the necessary affidavit, without perjury, unless it purchased the loan and security interest from the party that owned it. It cannot record the “security agreement,” without supreme fabrication of documents, unless there was a real purchase contract with a separate entity from whom it paid value for the purpose of purchasing the Loan and security interest in the DOT. And that other party had to be the party that owned the Loan and security interest at the time of purchase.

In order to execute the Affidavit in § 47-9607(b)(2), Claimant must purchased the Loan for value from the party that owned it previously, pursuant to 47-9203(b). Both the “Security Agreement” and the Affidavit had to have been recorded prior to posting the Notice of Trustee Sale. The required § 47-9607(b) writings were not recorded. Therefore, Claimant has no right to foreclosure non-judicially.

Pursuant to ARS § 47-9203(b)(UCC 9-203(b)), in order for Claimant as purchaser of the Note, regardless of whether it is negotiable or non-negotiable, to obtain the security interest in the Property and the right to enforce the security interest, three criteria must be met for the security interest contained in the DOT to attach: 1) value must have been paid for the Note; 2) the party from whom Claimant purchased the Note must have had ownership interests in the Loan and DOT rights; and 3) the party that sold the Note to Claimant must have provided an authenticated writing that provided assurances that the selling party owned the Note and DOT rights. See ARS §§ 47-9203(b)(3)(A)-(B). When reading 47-9203(b),

Eisele v. Kowal, 465 P.2d 605, 609 11 Ariz.App. 468 (Ariz. App., 1970). The often cited rule or law that the security interest follows the note needs clarification. The meaning of the rule is not that the security interest follows the “holdership” status of the note. It follows ownership of the loan, or the note, of which the note is evidence. This principal is codified at ARS § 33-817.

Assignment of mortgage without ownership of the underlying debt evidenced by the note is a mere nullity, or vice versa, is a mere nullity. See among others, Hill v. Favour, 52 Ariz. 561, 568, 84 P.2d 575, 578 (1938); First Nat. Bank of Saco v. Vagg, 65 Mont. 34, 212 P. 509, 510 (1922); Cornish v. Woolverton, 32 Mont. 456, 81 P. 4, 108 Am. St. Rep. 598; Jones on Mortgages (7th Ed.) 805, p. 274; 27 Cyc. 1286; Nagle v. Macy, 9 Cal. 426; Jackson v. Blodget, 5 Cow. (N.Y.) [202], 205; Jackson v. Willard, 4 Johns. ((N.Y.) 41; Schleef v. Purdy, 107 Or. 71, 214 P. 137, 140; Carpenter v. Longan, 16 Wall. 271, 21 L. Ed. 313; Missouri Real Estate & Loan Co v. Gibson, 282 Mo. 75, 220 S.W. 675; Webb v. Hoselton, 4 Neb. 308, 19 Am. Rep. 638; Miller v. Berry, 19 S.D. 625, 104 N.W. 311. And it is certain that any action purported performed by a MERS agent is a mere nullity.

Tags: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND
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