Indiana Court of Appeals Gets to the Real Thing — Forecloser Must Prove It Controls the Note

see 09291401mpb

Editor’s Note: This case is important because the court is no longer making presumptions that all elements of “holder with rights to enforce” are present. It 180 degrees opposite to the “discretionary” rulings by trial courts that the loan and the transfers of the loan must be valid — why else would the forecloser be i court. In discovery the homeowner has been restricted because of these presumptions — thus barring the homeowner from demanding proof that is in the sole care, custody and control of the Defendants. Or it is not i  their control, which is what this case says and what is true in nearly all other cases in which there is a foreclosure based upon defective loan origination documents that are subject to false claims of securitization.

The following are excerpts from the case decision:

According to the UCC, a negotiable instrument may be enforced by “the holder of the instrument.” Ind. Code § 26-1-3.1-301(1). The term “holder” means “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person if the identified person is in possession of the instrument[.]” I.C. § 26-1-1- 201(20). In this context, “bearer” means the person in possession of a negotiable instrument “payable to bearer or endorsed in blank.” I.C. § 26-1-1-201(5).

Wells Fargo claimed it controlled the Note and was entitled to enforce it pursuant to 15 U.S.C. § 7021, which provides:

(a) Definitions


For purposes of this section:

(1) Transferable record
The term “transferable record” means an electronic record that—

(A) would be a note under Article 3 of the Uniform Commercial Code if the electronic record were in writing;

(B) the issuer of the electronic record expressly has agreed is a transferable record; and

(C) relates to a loan secured by real property.

A transferable record may be executed using an electronic signature.

(b) Control
A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.

(c) Conditions
A system satisfies subsection (b) of this section, and a person is deemed to have control of a transferable record, if the transferable record is created, stored, and assigned in such a manner that—

(1) a single authoritative copy of the transferable record exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;

(2) the authoritative copy identifies the person asserting control as—


(A) the person to which the transferable record was issued; or

(B) if the authoritative copy indicates that the transferable record has been transferred, the person to which the transferable record was most recently transferred;

(3) the authoritative copy is communicated to and maintained by the person asserting control or its designated custodian;

(4) copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control;

(5) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and

(6) any revision of the authoritative copy is readily identifiable as authorized or unauthorized.

(d) Status as holder
Except as otherwise agreed, a person having control of a transferable record is the holder, as defined in section 1- 201(20) of the Uniform Commercial Code, of the transferable record and has the same rights and defenses as a holder of an equivalent record or writing under the Uniform Commercial Code, including, if the applicable statutory requirements under section 3-302(a), 9-308, or revised section 9-330 of the Uniform Commercial Code are satisfied, the rights and defenses of a holder in due course or a purchaser, respectively. Delivery, possession, and endorsement are not required to obtain or exercise any of the rights under this subsection.

(e) Obligor rights
Except as otherwise agreed, an obligor under a transferable record has the same rights and defenses as an equivalent obligor under equivalent records or writings under the Uniform Commercial Code.

(f) Proof of control
If requested by a person against which enforcement is sought, the person seeking to enforce the transferable record shall provide reasonable proof that the person is in control of the transferable record. Proof may include access to the authoritative copy of the transferable record and related business records sufficient to review the terms of the transferable record and to establish the identity of the person having control of the transferable record.

(g) UCC references
For purposes of this subsection, all references to the Uniform Commercial Code are to the Uniform Commercial Code as in effect in the jurisdiction the law of which governs the transferable record.

Given the lack of evidence regarding a transfer or assignment from Synergy to

Wells Fargo or Fannie Mae, Mouzon’s conclusory testimony was not sufficient to establish that it controlled the Note as defined in §7021. Thus, Mouzon’s trial testimony did not establish that Wells Fargo is entitled to enforce the note as the holder, and is not a basis for affirming the judgment of foreclosure.


Wells Fargo has not shown that it controls the Note for purposes of §7021(b) and, accordingly, has not established its status as holder for purposes of the UCC. Because Wells Fargo has not established that it was entitled to enforce the Note as its holder, the trial court’s grant of summary judgment was improper and the resulting judgment must be set aside. We reverse and remand.

Reversed and remanded. BRADFORD, J., and BROWN, J., concur.

13 Responses

  1. UKG it’s like the analogy of putting a frog in hot water and bringing it to boil. They acclimate they get a comfortable warm fuzzy feeling and next you know – fried. We would all love to see justice served and the guilty punished for the suffering they caused to American families and because of one thing GREED. How much to can you eat I ask you.

    Racketeering Lawsuit over Robo-Signing Can Proceed

    September 30, 2014

    Yesterday, a federal appeals court ruled that a RICO lawsuit against Bank of America, its law firm, a law firm employee, and MERS could proceed.

    The United States Court of Appeals for the Sixth Circuit ruled that a Racketeer Influenced and Corrupt Organizations Act (“RICO”) lawsuit could proceed against Bank of America, NA (“BANA”), Mortgage Electronic Registration Systems, Inc. (“MERS”), the law firm of Lerner Sampson and Rothfuss, and one of the law firm’s paralegals, for illegal robo-signing in an earlier state court foreclosure action.

    The homeowner sued the four entities alleging that the law firm submitted a robo-signed mortgage assignment in an earlier foreclosure knowing that document was fraudulent. The lawsuit alleges that the law firm acted for BANA when it used that mortgage assignment to establish BANA’s ability to foreclose on the homeowner’s home, despite knowing the document was false. The lawsuit included multiple examples of this particular paralegal signing mortgage assignments on behalf of defunct companies, in what has become known as “robo-signing.”

    During the foreclosure case, judgment had been taken against the homeowner without him realizing the problematic documents. Only after the homeowner retained Doucet & Associates Co., L.P.A., who brought the robo-signing to the court’s attention, did BANA and LSR vacate the judgment and dismiss the foreclosure. Bank of America dismissed on the eve of the paralegal, Shellie Hill, having to appear and give testimony under oath about the mortgage assignment.

    After the foreclosure lawsuit was dismissed, the homeowner filed a federal lawsuit alleging several causes of action against all four parties. The district court judge initially dismissed the lawsuit, but today’s landmark decision by the federal court of appeals reinstated the most serious of the allegations. The lawsuit against BANA, MERS, LSR, and Ms. Hill will now continue under the federal racketeering statute, the Racketeer Influenced and Corrupt Organizations Act, a law initially designed to prosecute mob activity.

    The case is Slorp v. Lerner, Sampson, and Rothfuss; Bank of America NA, Shellie Hill, and Mortgage Electronic Registration Systems Inc, Case No. 13-3402, and is available here:

    Call Doucet & Associates Co., L.P.A. for more information or to help with your case at (614) 944-5219.


    Gene, the pdf link is there, it’s just hard to see … but this case seems to involve an electronic note and Wells Fargo claimed it controlled the Note and was entitled to enforce it pursuant to 15 U.S.C. § 7021 …
    so I’m not sure this affects the rest of us who are facing a servicer who holds a paper note with a blank endorsement. The UCC still seems to indicate that a holder of a paper note can enforce it as long as it has a blank endorsement.

    Now I wish someone would copy and paste where the UCC says a holder with a blank endorsement has to show proof of purchase or even the proof of how it was transferred and received , I don’t see any evidence of the UCC saying the holder of a paper note with a blank endorsement cannot enforce and foreclose .. if anyone can find that language in the UCC please copy and paste it here. Thank you.

  4. So NG cites a paragraph or two from a case that he does not even identify and then cites a few statutes and makes a few claims.

    Tell me, what is the actual case? Why not identify it? Why not link to the ruling to see what the case actually says and the circumstances of the case?

    Pathetic…………and those who accept the argument that NG presents without reading the case……….sad.

  5. Attornies with Ethics! I Like Them! Others, not so much. Many Blessings to All.

  6. Did I mention that after the ins n tax incident that the 1st thing I did was email my then attorney, and now former attorney working at the Federal Prosecuters Office? Their attornies dropped them like a Hot Potato.

  7. And UKG, my husband knows that if he filed bk agaInst his only debt, wich happens to be unsecured that . . . Thousands of Men Die of Stubberness every year.

  8. UKG, I wanted to sue the stuffins out of them. My attorney said the legal fees would exceed the loan amount. So the holder and standing issues left us at a Standoff. MSJ. I also wanted to know why in tarnations there were no prosecutions. I’m still waiting for an answer.

  9. Dumping houses on people is same as dumping shitty stock on unsuspecting investors, can’t see the difference. Unmarketable title . Guy that bought my house may be in for a very big shock, just another way of looking at this mess.

  10. Real estate is a huge liability as far as I’m concerned – while ever MERS lives. Shove the house

  11. @usedkarguy you hit the nail on the head, and Wells Fargo got a problem that I been saying since I first had the title search done in Aug 2010, and talked directly to MERS William Hultman and question him as to Wells Fargo claiming to be the owner of loan.

    I problem so far with all of this is that it so simple, were the courts did not demand if the originator was not the entity claiming the debt due, what the deal in proving a copy of the Note stating who is the owner of, an the receipt of how it was purchase!

    This is not rocket science and is more like Wal-Mart return policy, where you bring back the item you supposedly purchase at the store, yet you got no receipt of purchase, and not credit card activity of purchase, yet you expect the store to refund you monies? Now given there is a 90 day return policy and no record that this item even been on the store’s shelves, but Wells Fargo claiming that they have the rights to foreclosure for Fannie, who go no proof, yet Wells Fargo got itself place in title as the owner of the debt!

    Where is the paper work?

  12. Yes, my friends. Neil has finally caught on to the real issue: UCC and the person entitled to enforce as holder.

    Meanwhile, real estate sells for 40-50% off.

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