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I’m taking this as an invitation to discuss the fact and ramifications of the noteowner NOT being a holder in due course (one who takes a note, for instance, with notice of its dishonor, i.e., it’s in default ) is not a holder in due course. This is no small matter. It means that the noteowner is subject to any number of ‘affirmative defenses” to the enforcement of the note. I think we might spend some time identifying these affirmative defenses and the tenets of hidc,, as ongoing discussion will bring to light “winners”….?

Acc to Article 3-302, for instance,


•(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

(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).

(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.

(d) If, under Section 3-303(a)(1), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.

(e) If (i) the person entitled to enforce an instrument has only a security interest in the instrument and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.

(f) To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.

(g) This section is subject to any law limiting status as a holder in due course in particular classes of transactions. ”

1) Shouldn’t it be reasonable to force ABC to prove what if anyting was paid (d – “performance) for the note it seeks to enforce? My take on( d) is if ABC only paid 10k of a promise to pay 100k for a note, ABC is only entitled to enforcement of the 10k actually paid. But how might this interplay with
‘mere’ holder status?

2) Hasn’t the shell game made it impossible for one to give notice of a defense to the note to an alleged hidc? How do you notice a hidc when you don’t know who the hey it is? Isn’t this a violation of due process or some common right? Would notice of your defense to the servicer cut it? I doubt it. Don’t know. Is it reasonable to expect a homeowner to engage in forensic sleuthing $$$$ to determine (good luck) the owner of the note for the purpose of notice of your defense to the note? These questions may depend on the interpretation / meaning of the first line of (e). Is this reference to some kind of benefit in a cdo
or form of hypothecation? (got me)
There is a right to defeat hidc status (or notice wouldn’t be cited in this section), and it has been violated by third parties by the intentional hiding of the identity of the noteowner to whom the notice must be given. What does one call this infraction?
Violation of what right, what rule? This one? Due process?

So what are affirmative defenses available against a ‘mere’ holder of a note?
Fraud, set-off, duress, failure of consideration, payment before maturity. It seems to me the latter would include any kind of ‘insurance’, by any other name, payment on the debt by 3rd parties. (This should apply even in he case of hidc, would it not?)

Fraud in the inducement to sign the note in the first place?
A note is a contract, probably subject to the “meeting of the minds” provision. Was there a meeting of the minds? Were the maker and the payee agreeing to the same thing? (And for those of you who argue the payee is not the lender, there’s that)

So, as one judge so aptly put it, “What the court needs to know is a fact.” I say the court needs to first know the fact of whether the alleged claimant is a holder at all, and then is the alleged claimant a hdic – or not.

Ask the alleged bankster for a more definitive statement as to its alleged position if you plan to fight. I have yet to see one of these yeahhoos alleges hidc status. That’s because they’re not.

Since it is absolutely true, as I have maintained and Mr. Garfield confirmed, that paying a wrong party is no defense to a hidc, why in the world are people not bringing up this very real issue in pleadings? It’s a form of double jeopardy. If nothing else, banksters should be made to indemnify the homeowner against a claim by the real noteowner down the road. The only time I see that as a viable ‘alternative’ to the rules of evidence is when a court has ruled in favor of a bankster alleging possession of a bearer note. The bankster isn’t going to want to make the indemnification, that’s for sure.

Rule 17 demands than an action be prosecuted in the name of or by the real party in interest. How is a holder of a note it doesn’t own a real party in interest? It isn’t. So, as I’ve probably already said,
possession of a bearer note is not singularly dispositive of enforcement.

If a note endorsed in blank (anyone) or to a trust (trustee) could not have made it into a trust, may a bearer of that note nonetheless enforce? Who’s the real party? Not the trust – the note didn’t make it.
Not the depositor – it’s prohibited from double pymt.
Note is unenforceable? Windfall to homeowner?
Tough – homeowner didn’t do it. AND, trust has recourse against the depositor for non-delivery, so the trust is not without remedy. The one without the remedy is the one who caused the problem.

Real people need real strategies while the
securitization unfolds. So while MS is busy destroying Wall Street (and please get back to us on that one), we need arguments a judge can get his head around NOW.

21 Responses


    I had never responded to Plaintiff’s complaint and in September 2011, and Judgment and Decree of Foreclosure was entered. In November 2011, I wrote the Judge a very nice letter assuring him that I did receive notice of plaintiff’s complaint, however, no court order having been issued to compel my presence or answer, I declined said invitation, I assured the judge that I was certain that Plaintiff held no claim as holder in due course to my property and respectfully requested copies of all documentation entered into discovery as evidence to Plaintiff’s claim, including but not limited to the original blue/wet ink note and mortgage, proof of equal consideration and full disclosure.

    The judge immediately issued a new order requiring Plaintiff’s to produce. Upon further examination of documents, it seems highly likely that the mortgage assignment is fraudulent. It bears one version of many signatures of ROBOSIGNER, Scott Anderson and Notary Leticia Arias, it contains an instrument number, the assignment was recorded with county 26 days after the trust cut off date, the loan was in distress and modified 15 days after the assignment, which is a violation of UCC Article 3, 3-30 (2), which rendered plaintiff unable to become “Holder in Due Course”.

    I go to court in 3 days for hearing on court’s order for Plaiintiff’s to produce and I would really like to spank them bad….any suggestions?

  2. Zoe
    BOA NA is not Parent.
    Please send Qualified Written Request per the law or you won’t get a response to get the information you need.

    Example of QWR written by lawyer on Scirbd

    If QWR has not been sent example of one written by a lawyer that appears of value link provided

  3. Bulk Sales and Interim Servicing Agreement 9/26/2007
    (American Home Mortgage Loans)

    Lehman Brothers Bank, FSB pursuant to following specified mortgage loan purchase and warranties agreements (each a Bank Transfer Agreement, collectively ‘Transfer Agreements” has purchased or received from certain transferors identified below certain mortgage loans (identified on Mortgage Loan Schedule) Schedule A – Transferred Mortgage Loans

    1. Bulk Sale and Interim Servicing Agreement by and between the Bank and Broadhollow Funding LLC 9/26/2007
    (American Home Mortgage Loans)

    Seller Warranties and Servicing Agreement between Lehman Brothers Bank FSB and Indymac Bank FSB dated as of 7/1/2003 and amended as of 12/29/2004 and 6/28/2006.

    Loan Purchase Agreement by and between the Bank and Residential Mortgage Corp dated as of 1/9/2003.

    Flow Mortgage Loan Purchase and Warranties Agreement by and among the Bank, Flagstar Bank FSB and Flagstar Capital Markets Corp 1/1/2007.

    Amended and Restated Flow Mortgage Loan Purchase and Warranties Agreement by and between the Bank and Lydian Private Bank dated as of 6/20/2007.

    WHEREAS, pursuant to an assignment and assumption agreement (the “Assignment and Assumption Agreement”) dated as of August 1, 2008, between the Lehman Brothers Bank FSB, as assignor, and the Seller, as assignee, the Bank has assigned all of its right, title and interest in and to the Transfer Agreements and related Mortgage Loans as listed on Schedule A, in the case of the Transferred Mortgage Loans, or Schedule B, in the case of the Bank Originated Mortgage Loans, and the Seller has accepted the rights and benefits of, and assumed the obligations of the Bank under, the Transfer Agreements;

    WHEREAS, the Seller is a party to the following servicing agreements (the “Servicing Agreements”) pursuant to which the Mortgage Loans are serviced by the servicers (the “Servicers”):

    1. Servicing Agreement dated as of August 1, 2008, by and among Holdings, as seller, and Aurora Loan Services LLC, in its capacities as Servicer and as Master Servicer, and as acknowledged by the Trustee.




    2. Reconstituted Servicing Agreement dated as of August 1, 2008, by and among Holdings, as seller, Countrywide Home Loans Servicing LP, in its capacity as Servicer, and Countrywide Home Loans, Inc., and as acknowledged by Master Servicer and the Trustee.

    3. Reconstituted Servicing Agreement dated as of August 1, 2008, by and among Holdings, as seller, and IndyMac Federal Bank, FSB (as successor to IndyMac Bank F.S.B.), in its capacity as Servicer, and as acknowledged by the Master Servicer and the Trustee.

    WHEREAS, the Seller desires to sell, without recourse, all of its rights, title and interest in and to the Mortgage Loans to the Depositor, to assign all of its rights and interest under each Transfer Agreement and each Servicing Agreement relating to the Mortgage Loans referred to above, other than any servicing rights retained by the Seller hereunder, and to delegate all of its obligations thereunder, to the Depositor; and

    WHEREAS, the Seller and the Depositor acknowledge and agree that the Depositor will convey the Mortgage Loans to a Trust Fund created pursuant to the Trust Agreement, assign all of its rights and delegate all of its obligations hereunder to the Trustee for the benefit of the Certificateholders, and that each reference herein to the Depositor is intended, unless otherwise specified, to mean the Depositor or the Trustee, as assignee, whichever is the owner of the Mortgage Loans from time to time.

    NOW, THEREFORE, in consideration of the mutual agreements herein set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Seller and the Depositor agree as follows:

  4. OOPS, here ‘s the rest……..

    In late April, the Michigan Court of Appeals ruled that Mortgage Electronic Registration Systems Inc. is ineligible to use the state’s nonjudicial foreclosure process because MERS does not meet the requirements to foreclose by advertisement and should have filed the foreclosures through the state’s judicial process. That ruling vacated the 2009 foreclosures of two borrowers.

    In an email to HUD mortgagees that was obtained by National Mortgage News, the agency said most of the major title insurance company underwriters have ceased issuing title insurance for any properties where MERS foreclosed by advertisement.

    “As a result, any Michigan REO properties in HUD’s inventory that cannot close due to an inability to obtain title insurance must be re-foreclosed in accordance with the Michigan Court of Appeals opinion,” the email reads.

    In the two cases before the Michigan court, MERS was the mortgagee in county property records and was the named entity initiating the foreclosure. The court ruled MERS could have remained the mortgagee and filed a valid judicial foreclosure or the investors could have obtained assignment of the mortgage from MERS and initiated the nonjudicial foreclosure.

    A HUD spokesperson told NMN the department will not dictate to mortgagees which method to use in the reforeclosures once the properties are reconveyed, adding that mortgagees are responsible for ensuring HUD receives good and marketable title to REO properties in compliance with state laws.

    The policy applies to all Michigan REO properties in HUD’s inventory where MERS executed the initial nonjudicial foreclosure. Currently, HUD has 3,600 REO properties in the state. Making the issue murkier though is uncertainty about how many properties became REOs at the hands of MERS-initiated foreclosures.

    HUD has asked mortgagees to identify affected properties and notify its Mortgagee Compliance Manager, vendor Michaelson, Connor & Boul by June 7, after which the properties will be reconveyed by HUD to allow the mortgagee to cure the title defect.

    HUD’s National Servicing Center will conduct a conference call to address this reconveyance process on June 1. Later it will publish written guidance.

    The practice of servicers foreclosing in the name of MERS—rather than filing a mortgage assignment transfer to the note holder prior to initiating the foreclosure—has come under increasing scrutiny, and it’s a routine MERSCorp has recently proposed eliminating.

    In March, MERSCorp proposed a rule change that would require that servicers assign the mortgage to the name of the foreclosing entity. The rule is currently pending a 90-day comment period, during which MERS requested its members do not foreclose in its name.

    If the proposal is enacted, the MERS board of directors will have to first approve it and set a start date for the new policy.

    Here’s the little victories turning into big victories. Every one of these Michigan homeowners should be moving back in if there is anything left of their homes. It’s sickening.


    The Department of Housing and Urban Development will re-foreclose on all its REO properties in Michigan where the original foreclosure was conducted in the name of MERS using the state’s nonjudicial process.

    Skimmed from MSNews….

  6. Where are the attorneys who can go right to the root of the securitization fraud and file cases? Don’t have to be in default or foreclosure yet – same fraud occurred.” Some who “get it” will not talk to you if you are not willing to go bankrupt or if your mortage is older than 3 years and not in default or foreclosure. Time to go on the offense instead of the defense. Sooner rather than later. Ok we owe someone who can be verified a true creditor. We don’t owe a fraudster. Only homeowners can do it now. Can’t just wait and count on the state AGs or the SEC or the IRS to get to the root of it or do anything to help homeowners. Obviously a decision was made long ago to let them eat cake. We have been waiting for action from govt. for years. Maybe robo signing finally got their attention but the reason for the robo signing is still obsured and could remain obscured if homeowners do nothing. Investigations come up with bad loans and shoddy underwriting for investors who want to put back and get their money back. Homeowners are perhaps forgiven for “predatory loans” or still blamed for greed and stupidity. Problems with modifications are getting some attention but it is still govt sending homeowners to the wolves – who are pretender modifiers and make you sign away your rights to challenge the pretender. Homeowners continue to be sold down the river by all. So if you have your psa and other documents in hand where do you go? Not a clue here in this town in Calif – just get the brush off. Is pro se your only choice even if you have money? Is pro se your only choice if you don’t have any money?

  7. And how does one find and produce the data that proves that the “note” never made it into the trust?

    Other question: Does anyone know anything about reverse mortgages? I have a relative in another state that passed away several months ago—a family friend tried to sell the house—hasn’t been able to, and they are now trying to foreclose…I have been unable to look at the paperwork, but I was wondering what kind of fraud these guys might be trying to pull with the reverse mortgage foreclosure…if it was refinanced into a reverse mortgage a few years ago, would it most likely be involved with the MBS debacle????

  8. Are judges not “getting their heads around this” stuff because this type of fraud is so unprecedented? I mean, if a note—which is not really a note—never made it to the trust—then ALL is ILLEGAL…I’m guessing judges just wait for some lawyer to “show” them the law? Sorry, my head is spinning from all this…

  9. Stanley Putra,

    Absolutely correct. What many are not getting — is that subprime “notes” are not valid UCC notes. When original loan is charged off — the loan/note no longer exists. All that remains is collection rights to charged-off default debt. AND, those rights can be transferred by assignment.ONLY — and not by “transfer” of a negotiable note — which is DEAD.

    All subprime “refinances” (100% refinances) — were charged-off debt by GSEs — and even new purchases — over the loan limit — were either rejected by GSEs — or accepted and then charged-off. All that remained to these charge-offs are collection rights — NOT A NOTE.

    And, the only way you can transfer collection rights — is by ASSIGNMENT. Not subject to negotiation under UCC.

    Government is aware — but stalling. Subprime refinances “satisfied” prior false default — but NOT by the borrower — insurance paid out. Satisfied does NOT mean “PAID” by borrower at refinance. .

    Your refinance??? Not a refinance — not a new NOTE.

    But, who knew???

    MERS?? A processor for assignment of (false) default collection rights.

    Stan — you are accurate.

  10. Excellent points JG. Very thought provoking. Here in CAL, it’s a bit of a tougher slog on the HIDC claim or defense, but if tactically, you can get in a position to assert HIDC claims or defenses, this is solid information with which to form a cogent argument before a Judge.

    On a different note below is an argument (initially successful in Nevada USD Court) that can be used if MERS assigned the DOT/Note and yet Recontrust is still moving with Trustee Sale:

    C. ReconTrust’s Position as Substitute Trustee is Untenable Pursuant to The Restatement (Second) of Agency and Restatement of Trusts.

    All beneficial interest in Plaintiff’s DOT and Note were assigned by MERS to US BANK as Trustee for Certificate Holders of SARM 2005-19XS on June 24, 2010. US BANK is Trustee in this case, as the record currently states, and may not delegate their duty or discretion to another. The Restatement (Second) of Agency 18 states:
    “Thus trustees cannot delegate to others the use of discretion in
    exercising their powers, unless the terms of the trust so provide or unless, as in the case of details involved in the management of trust property, the act is of such a nature that it is inferred that the exercise of personal discretion is not mandatory.” Id. § 18 cmt. c.

    Further, The Restatement of Trusts indicates that where U.S. Bank as a mere trustee purports to make or allow ReconTrust to be the trustee in its stead, is improper:

    “The trustee is under a duty to the beneficiary not to delegate
    to others the doing of acts which the trustee can reasonably be required personally to perform. . .. A bequeaths all his property to B in trust. B transfers the trust property to C who agrees to perform the trust. This is a violation of the duty of B.” (Restatement of Trusts § 171 & cmt. b.,illus. 1.)

    A Trustee may delegate this authority or duty if the terms of the Trust allows it to, but in this case the language of the DOT clearly does not address this possibility at all. The DOT indicates only that “Lender at its option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed hereunder.” (Compl. EXHIBIT 5, at #24) (emphasis supplied)). US BANK therefore has no authority to name or have ReconTrust act on its’ behalf or substitute it and conduct a Trustee’s sale of Plaintiff’s property and would be in violation of the DOT.

    Everybody’s own situation is unique and needs to be closely considered, but the general idea here is if the DOT/NOTE were assigned by MERS (or anyone) to a securitized trust/trustee and if any other entity is holding the “trustee’s sale”, this is a solid argument.

  11. April said:

    “He has 7 wins already under his belt and he did not just stop the foreclosure, he threatened their Securities licenses and they ponied up with EVERY single dime the homeowner had paid in to the “servicing company” from the date the securitized audit showed the loan had been assigned to a REMIC Trust and according to the PSA (Pooling & Servicing Agreement).”

    Come on, lawyers—where are you? Your paycheck is waiting! And homeowners get justice, too!! Am I wrong???

    I have a questionable securities trust with a questionable PSA—with an IndyMac servicer extorting money from me–since 2006—-

    my email: cariemac9@gmail

    This is how we stick it to them and make sure it never happens again!!!!!!!!!!!!!

  12. Yes MERS will only assign the mortgage if the defendant is in default, foreclosure. In one of my cases MERS assigned the Mortgage 7 months AFTER THE default judgment.

  13. thanks, JG. nice explanation.

  14. My CA pleadings consistently use ‘holder of the beneficiary interest’ because that accounts for the interest passed to the ‘investors’ during the securitized period. This works a lot better than ‘holder of the note’ which the banksters can emphasize to mean holder of the physical note, which is a staple of their standard play book. The CA judges’ handbook cites the case that determined physical possession of Note is not necessary to conduct non-judicial FC.

    I’m also pressing to use the presentment of UCC-3 to protect the interest of a subsequent purchaser by forcing the lender to return the original promissory note to the borrower as evidence that a clear title is held to the property. In this way I push the requirement of the Note to have a contract, and a requirement to have the Note at the end to have a clear title, so how does the CA ruling you don’t need the Note in the meantime make any legal or logical sense?

  15. I have stayed awake at night trying to figure out what BoA is trying to accomplish with the recent transfers, which Neil reported a few weeks ago. Do these transfers further complicate the holder in due course issue?

    I’ve been talking to friends with homes in foreclosure since last year who received notices of transfer. The former servicer, BAC (fka Countrywide), is the plaintiff and alleged “owner/holder” of the indorsed-in-blank note. It is the new mortgagee of record, courtesy of MERS–despite the fact MERS is named as a defendant too. Bank of America Home Loans, (not BAC) sent notice that servicing is now transferred to BoA, N.A, the parent company. (I get dizzy trying to keep up with all the names coming from these TBTF banks. Who in the world can unravel all this mess!)

    In one case I know about, the BAC second mortgage loan also was transferred–to the investor of record (according to BoA QWR response and MERS’ online lookup). The-already-named-a-year-ago investor called itself the “new creditor” in the transfer notice, which was mailed with a return address seemingly unrelated to BoA or any of its tentacles. Strangely, it lists MERS as the party to receive legal notice. (Should that legal notice be sent to Linda Green’s attention?)

    The new creditor notice said BAC remained the servicer, but a week or so later, Bank of America Home Loans (again, not BAC) sent a notice of servicing transfer to BoA, N.A., the parent company. How is the homeowner to know which one is correct?

    Why would these loans be sent to the parent company for servicing, especially when the home is already in foreclosure? Has the parent company ever serviced loans before now? If not, why now?

    What is going on with the strange transfers? Do these changes possibly provide grounds for new or stronger affirmative defenses?

  16. Thanks, April…I wish I lived in Huston…!

    But, if your lawyer can do this, why aren’t lawyers everywhere doing this? You say he has all these “wins”—I live in the Los Angeles area and would LOVE to meet with someone who “gets it” like him…I just don’t understand why lawyers aren’t all over this angle like what you are talking about—I will be contacting you, April!

  17. And, most importantly how they get around your claiming harms to above….

    Master Servicer DOES NOT ALLOW ‘Trustee which is always National Banking Association (to be registered to do business in any state).

  18. The one without remedy is the one that caused the problem and so where to place the blame who the heck can take on wall street anyway

  19. JOHN GALT,

    Very good — and like your indemnification idea.


    Add to this that subprime “loans” were already in manufactured “default” before they came anywhere near to the proposed REMIC — thus, could never have even been a Note to begin with. .

  20. If you are anywhere near the Houston area, I have found a saint of saints of a real estate attorney. He has been practicing 37 years and he “gets it”. He is handling both mine and and my dear friends cases and he is very reasonable. He has 7 wins already under his belt and he did not just stop the foreclosure, he threatened their Securities licenses and they ponied up with EVERY single dime the homeowner had paid in to the “servicing company” from the date the securitized audit showed the loan had been assigned to a REMIC Trust and according to the PSA (Pooling & Servicing Agreement). He has siad that he could possibly take on 5 to 7 more clients right now (he is in his late 60’s) and I would be very happy to speak to anyone that would be interested and tell you what you need to have to prepare for your meeting with him. Some of it involves some research and if any of you have a friend that works at or for a title company, I can tell you what you need to ask them to help you get so that you may be able to avoid having to order the securitized audit (in case you cannot afford it) Please contact me at with any questions. I hope we can at least help some of you.

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