How to Distinguish Between Ownership of the Debt, Ownership of the Note and Ownership of the Mortgage (or Deed of Trust)

Amongst the lay people who are researching issues regarding who actually can enforce a mortgage, there is confusion arising from specific terms of art used by lawyers in distinguishing between a debt, a note and a mortgage. This article is intended to clarify the subject for lawyers and pro litigants. The devil is in the details.

Bottom Line: In most cases foreclosures are allowed because of the presumption that the actual original note has been physically delivered to the current claimant from one who owned the debt because they both had paid money for it. In most cases merely denying that fact is insufficient to prevent the foreclosure because the court is erroneously presuming that even if the foreclosure is deficient the proceeds of sale will still go to pay the debt.

In most cases those presumptions are untrue but must be rebutted. And the way to rebut those presumptions is to formulate discovery that asks who paid for the debt, when and who were the parties to the transaction?

The  lawyers from the foreclosure mills will fight tooth and nail to prevent an order from the court directing them to answer the simple question of who actually owns the debt by reason of having paid value for it and thus who will receive the foreclosure sale proceeds as payment for the debt. The answer is almost always the same — the foreclosure mill is unable to identify such a party thus conceding the lack of subject matter jurisdiction and standing to bring the foreclosure action.

Eventually some party will be identified by changes in the law as being the legal owner of the debt. thus cleaning up the jurisdictional issue caused by utilizing parties who have neither suffered any financial injury nor are threatened with any such financial injury. But for now, the banks are stuck with the mess they created.


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Transfer of debt is by payment for the debt. Payment means you have a legal and equitable right to claim the debt as your own. Payor is the new owner of the debt and the Payee is the prior owner of the debt. There are no exceptions.

The note is evidence of the debt. It is not the debt.
Payment of money to a borrower creates a debt or liability regardless of whether or not any document is signed.
Signing a document promising to pay creates a liability regardless of whether or not there was ny payment of money. In fact, if someone buys the note for value they become a holder in due course and the maker is liable even if they never received any money, value or consideration.
Enforcement of the debt alone is governed by statutory and common law.
Enforcement of notes and enforcement of the security instrument (mortgage or deed of trust) is controlled strictly by the adoption of the Uniform Commercial Code (UCC).
Article 3 UCC governs the negotiation and enforcement of paper instruments containing an unconditional promise to pay a certain sum on a certain date.
Article 9 governs the transfer and enforcement of security agreements (mortgages and deeds of trust).
Whereas Article 3 does not require the holder of the note to be the owner of the debt for purposes of enforcement of the note, Article 9 requires the holder of the mortgage to be the owner of the debt as a condition precedent to enforcement of the mortgage. No exceptions.
Ordinarily the execution of the note causes the debt to be merged with the obligations under the terms of the note. But this is only true if the owner of the debt and payee under the note are the same party. If not, then the execution of the note creates two distinct liabilities — one for payment of the debt and one for payment under the terms of the “contract” (i.e., the note).
Before securitization it was customary that the owner of the debt had paid money to the borrower as a loan, and the execution of the note formalized the scheme for repayment. Hence under the merger doctrine the borrower who accepted the loan and the maker of the note were the same party and the Lender of the money to the borrower was also the payee named in the note.
Now this is not always the case and appears to be not the case in most loans, which is why the banks have resorted to fabricated backdated forged and robosigned documents. The Lender in many if not most loan originations was not the party named as payee on the note. And the party named as payee on the note had no authority to represent the interests of the lender. Where this is true, merger cannot apply. And where this is true, enforcement of the note is NOT enforcement of the debt. Rather it is enforcement of a liability created entirely by contract.
Foreclosure of a mortgage must be for payment of the debt, not just the liability on the note. All states have case law that says that transfer of mortgage without the debt are a nullity. This executing and receiving an assignment of mortgage and even recording it is a legal nullity unless the recipient paid money for the debt and the transferor was conveying ownership of the debt because the transferor had paid money for the debt. If those conditions are not met the executed and recorded assignment of mortgage is a legal nullity and the title record must be viewed by the court as lacking an assignment of mortgage.
The judiciary has not caught up with these discrepancies in most instances. Hence a judge will ordinarily presume that the delivery and endorsement of the note and the assignment of the mortgage was equivalent to the transfer of title to the debt, with payment being presumed for the debt. So while the law requires ownership of the debt by reason having paid for it, the courts presume that the debt was transferred along with the paper, subject to rebuttal by the maker and borrower.
The rubber meets the road when in discovery and defenses the borrower raises the issue of who paid for the debt and when. In the current world of securitization the answer will be the same: the banks won’t tell you and they won’t admit that the party named as claimant in the foreclosure never paid for the debt, despite appearances to the contrary. 

45 Responses

  1. Storm – we all know that courts do not examine the facts. They don’t even let you get to base 1. You know this.

    Technicalities. Bogus.

  2. ANON, the facts are what the courts say they are. That’s why I keep posting the cases refuting these charlatans and their “useful idiots” who parrot their nitwittery.

  3. Storm — facts will get told. However, they are already in front of you — find them. I know you can do it. You are bold.

  4. You’ve been exposed, Storm. Most people stop digging when they find themselves in a hole, but not you. Please keep on digging in your hole and entertain us further .

  5. Earnie, that’s basically the law in every state, but these chain of title/securitization/forensic audit scammers don’t want homeowners to know this fact, because if these homeowners knew the truth, these charlatans wouldn’t be able to rip them off selling their worthless audits.

  6. ANON, you made comments as though they were factual. Show me the facts.

  7. Really? Vermont law says possession at the time of filing=holder in due course (HDC)? Really? Vermont did away with Article 9 also on sale of payment intangibles? Can you share that case law?

  8. Here in Vermont, the Supreme Court has ruled that it is not necessary for the Plaintiff for foreclosure show a clear chain of title for the note in order to foreclose. All that is necessary is possession of the note at the time foreclosure is filed.

    This is, in part, why Plaintiff’s refuse to provide evidence of who paid who for the note in discovery. Which further makes proving that the Plaintiffs lack standing. On this issue, motions to compel fall on dead ears.

  9. Storm — trust does not hold anything. Security investors may own beneficial rights — but they do not “Hold.” Federal Reserve has already come down on this and it is codified as law.

    Trustee “holds” on behalf of trust. Trustee doesn’t have — then what is the location of the trust and how does it account? Servicers act on behalf of trustee – not the trust. Trustee acts on behalf of beneficial security investors — trust an inanimate object that cannot act alone.

    You know this. Case law. And, if not a traditional trust, all members must be disclosed for diversity purposes. You know this.

  10. ANON, just because a securitized mortgage investment trust has the note wouldn’t cause “title”issues;” if that was the case nobody could refinance. So there’s obviously something else going on.

  11. djunkman, you’re a fraud. I never said “possession= holder.” I simply posted the UCC definition of holder.

    This is what you scammers do, your comments are nonsensical, or totally wrong, and one someone points it out by providing case law, or statutory proof, they’re “bank shills” and posting “disinformation.” You’re a real clown!

  12. No — did not deed over to any personal trust. Assignment is to a trustee to a REMIC Trust.

    Bob G— no go.

  13. try a quiet title action. i think that we discussed that before.

  14. Since Storm says “possession = holder” I’d like him to explain why there is an entire body of law – both case law and UCC statutory law – on being a nonholder in possession with the rights of a holder? Obviously possession does not make you a holder or there would not such a thing as a nonholder in possession with the rights of a holder.

    He’s here on this blog for one reason – disinformation. It should be plaint to you all by now.

  15. ANON, did you deed it over to a trust?

  16. Behave kids…lol

  17. I would like to see how any of you answer this – if you can.

    What about a situation where there is NO enforcement of the note, because never in default. I know this is a foreclosure blog, but my situation is different – never in default. However, can’t get a refinance because the last assignment is to a trustee to a trust — and title companies cannot reconcile payoff to a servicer. So refinances get denied due to “title issues.”

    Does anyone have an answer to this??? .

  18. This clown djunkman says: “Storm is wrong as usual. Storm is a bad dude people”

    No, I don’t make stupid claims like djunkman aka Neil Garfield. I guess in his warped mind, posting court cases proving him wrong makes me “bad dude.”

  19. Again, this clown djunkman has no clue. The final outcome of the Slorp case, the court held: “The evidence establishes that BANA had standing to foreclose in the Foreclosure Action. As discussed above, BANA had standing because it was the holder of the Note, and also had standing because the assignment of the note was authorized by MERS, the nominee of BAC. Slorp v. Lerner, Sampson & Rothfuss CASE NO. 2:12-CV-498, at *12 (S.D. Ohio Jul. 19, 2016)

  20. 3-201(b) (b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.

    3-203(c) (c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made.

    So, Storm is wrong as usual. Unless it is properly indorsed it is not negotiated. and until it is negotiated, you are not a holder, merely a PETE that has to prove up your right to enforce the note through transfer under either 3-203(b) or 9-203(b)

    Storm is a bad dude people …

  21. Now djunkman claims: ” Possession does not make you a holder.”

    UCC 1-201: “Holder” means: (A) the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession; or (B) the person in possession of a document of title if the goods are deliverable either to bearer or to the order of the person in possession.

    Why these clowns keep embarrassing themselves, strain credulity!

  22. Those cases were cited in Slorp to distinguish the context of “void” and “voidable” – Storm doesn’t understand the difference. All you need to say for your defense is I don’t owe that entity any money. Period. That’s your defense. Whatever money you did receive you owe to someone – just not the party claiming on that debt. Make them prove it up. Use discovery to show they can’t prove it up. It’s as simple as that. That’s all Neil is saying.

    “There was no dispute in Livonia Properties that the assignor had assigned title to the assignee; rather, the homeowner lacked “standing” to assert that the assignment was not properly recorded and suffered from technical defects that prevented the assignee from establishing record chain of title under Michigan law. In this case, by contrast, Slorp alleges that Bank of America, the putative assignee, held neither his mortgage nor the attendant promissory note when it filed the foreclosure action because the parties lacked the authority to assign his mortgage to Bank of America when they purported to do so. That distinction makes all the difference. See Conlin, 714 F.3d at 361 (stating that a third party may challenge an assignment if that challenge would
    render the assignment void). Because Slorp alleges that the assignment was fraudulent and that Bank of America therefore did not hold title at the time of the foreclosure,3 Livonia Properties does not bar his suit—in fact, it supports it.” Slorp v. Lerner, Sampson & Rothfuss

  23. This mental lightweight djunkman like most legal illiterates doesn’t even understand what he’s reading.

    He cites: Conlin v. Mortg. Elec. Registration Sys., 714 F.3d 355, 361 (6th Cir. 2013); Livonia Props., 399 F. App’x at 102; see also Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 353–54 (1st Cir. 2013.) Those cases say nothing of the sort. All three of those cases were losers because the courts held those plaintiffs couldn’t challenge the assignments. From Conlin giving an example from the Livonia Props case: “[e]ven if there were a flaw in the assignment, Livonia [Properties] does not have standing to raise [it].”

    My litigation support company has all of the cases dealing with foreclosure at hand. When lawyers come to us and pay us big bucks they expect we have superior knowledge in these matters. And in order to have superior knowledge we have to know the law on said matters.

  24. He’s getting desperate now. Possession does not make you a holder. Negotiation is required to be a holder 3-203(c). If it wasn’t negotiated you may still have possession and not be a holder. So, if not a holder, you must be a PETE to enforce it – which is proven up through Article 9 transfer law 9-203(b). Possession does not make you a holder – negotiation does – and ability to enforce the note is not equal to the ability to enforce the mortgage.

  25. djunkman, says don’t listen to Storm; but you sure as hell better listen to court cases I’ve provided.

    djunkman is another mental lightweight clearly doesn’t know the law. He claims: “A thief may be able to enforce a note but it can’t also enforce the note’s security instrument. WRONG! Again, the basic fact doesn’t change, whoever has possession of the not can foreclose, doesn’t matter how they got it–PERIOD.

    The Florida Supreme Court in the 1938 seminal case Johns v. Gillian holding “[a] mortgage is but an incident to the debt, the payment of which it secures, and its ownership follows the assignment of the debt. If the note or other debt secured by a mortgage be transferred without any formal assignment of the mortgage, or even a delivery of it, the mortgage in equity passes as an incident to the debt, unless there be some plain and clear agreement to the contrary, if that be the intention of the parties.” Johns v. Gillian, 184 So. 140, 143 (Fla. S. Ct. 1938) (citations omitted)).

  26. Good luck to you Bob…. You should get a good lawyer that understands commercial transactions. Foreclosure is enforcement of a perfected lien. Nothing more. You don’t get it and need help with it. I wish you well.

  27. so now he’s talking about assignments? “a non-party homeowner may challenge a putative assignment’s validity on the basis that it was not
    effective to pass legal title to the putative assignee. See Conlin v. Mortg. Elec. Registration Sys., 714 F.3d 355, 361 (6th Cir. 2013); Livonia Props., 399 F. App’x at 102; see also Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 353–54 (1st Cir. 2013); 6A C.J.S. Assignments § 132 (“The debtor may also question a plaintiff’s lack of title or the right to sue.”).

  28. understood…but that’s not really news. a bankster can sue on the note (dumb move because any judgment would be dischargeable in BK, or BK before judgment is obtained eliminates the liability on the note), or sue to foreclose the mortgage (smart move). but the bankster must elect his remedies. either sue on the note or sue to foreclose the mortgage. i think that folks here are looking for some help in defending against the foreclosure option.

  29. Bob G. email me can you?, have something for you.

  30. Bob, a check is a negotiable instrument. It is directly on point. A negotiable instrument is dishonored upon default by the maker and a refusal by the indorser to make it good (and all securitization indorsements are anomalous indorsements without recourse so upon default all said instruments are dishonored) – i.e., bounced check – so the payee of that check/instrument can either get a judgment for the debt or enforce the security – an auto contract contains a security agreement in it similar to a mortgage on the car (property). UCC 3-310 is how a negotiable instrument is created and enforced – as a matter of black letter law. This case is directly on point. Just because others don’t understand and haven’t cited UCC 3-310 and case law applying that doesn’t mean anything.

  31. djunkman…the PK case doesn’t seem apropos to what we are dealing with in the mortgage foreclosure context. and that case has not been cited by any other court in 12 years.

  32. Bob G., maybe this line of cases will clarify things for you:

    “MORTGAGE BORROWERS ATTEMPTING TO CHALLENGE THE ASSIGNMENT OF THEIR MORTGAGES IN CONNECTION WITH THE SECURITIZATION OF THOSE MORTGAGES DO NOT HAVE ARTICLE III OR PRUDENTIAL STANDING TO BRING SUCH CLAIMS. See Rajamin v. Deutsche Bank Nat. Trust Co., 757 F.3d 79, 86 (2d Cir. 2014) (“We conclude that plaintiffs failed to allege injuries sufficient to show constitutional standing to pursue their claims. . . . Plaintiffs have advanced several theories for prudential standing. Each fails.”)

    The Second Circuit found that plaintiffs’ “challenge to defendants’ claim of ownership of plaintiffs’ loans, implying that the loans are owned by some other entity” to be “highly implausible” as no “billing or other collection efforts” by the purported true owner of the mortgages had ever occurred. Id. at 85. There had also been no “allegation of any threat or institution of foreclosure proceedings” by any entity other than defendants. Id. Thus, the Second Circuit concluded that plaintiffs’ alleged injuries were too “conjectural or hypothetical” to show “constitutional standing to pursue their claims.” Id. at 85-86. Furthermore, to the extent that plaintiffs’ challenges to the validity of the assignment of their mortgages was based on alleged incompliance with the assignment agreements, to which plaintiffs were not a party, the Second Circuit also found that plaintiffs lacked “prudential standing.” Id. at 86.

    Following Rajamin, “[t]he authority of this Circuit . . . dictate[s] that A PLAINTIFF GENERALLY DOES NOT SUFFER AN INJURY BY VIRTUE OF AN ASSIGNMENT OF HIS MORTGAGE, EVEN IF THAT ASSIGNMENT WAS INVALID OR UNLAWFUL.” Houck v. U.S. Bank, N.A. for Citigroup Mortg. Loan Trust 2007-AR5, No. 16-3660-CV, 2017 WL 1735252, at *2 (2d Cir. May 3, 2017) (summary order). The Second Circuit has “reasoned that, regardless of whether a mortgage was validly assigned, the mortgagor is still obligated to repay someone, whether it be the original lender or the entity to which the mortgage was assigned.” Id. IN RE BECKFORD v. BAYVIEW LOAN SERVICING, LLC, Dist. Court, D. Connecticut 2017.

    Here is another case, VIERA LOPEZ v. BAYVIEW LOAN SERVICING, LLC, Dist. Court, SD New York 2017, where the poor homeowner got scammed by one of these scam auditors making the same stupid arguments about assignments and securitization arguments. These criminals can’t sell their worthless audits if thay can’t convince people of this nonsense.

  33. Nothing but a schill – you others should not listen to anything Storm says … A thief may be able to enforce a note but it can’t also enforce the note’s security instrument. You can’t enforce both, it has to be either one or the other.

  34. Djunkman,The only people who make your stupid arguments are scammers trying to sell their scam TERA/securitization/chain of title/forensic audits.

    Basic fact, whoever has possession of the not can foreclose, doesn’t matter how they got it–PERIOD. Deal with it!!

  35. Re djunkman and storm…this is great counterpoint stuff. now we are getting somewhere. it would be helpful if junk provided a litigation road map and some practical strategies/tactics that could be used by homeowners and/or defense counsel. how about it, djunkman ?

  36. Storm – you are nothing but a bank schill – the mortgage follows the note under Article 9 – 203(g). Article 9 controls ownership and perfection of the specific lien created by the mortgage.

    You have to own the debt obligation merged into the note to own the mortgage. You have to own the specific lien of the mortgage to enforce it. Sale of the debt merged into the negotiable instrument created under under UCC 3-310(b)(2) that is sold in the secondary market is an Article 9 transaction. UCC § 9-109(a)(3) (stating that Article 9 applies to sales of payment intangibles or promissory notes). See generally, e.g., Julian B. McDonell & John Franklin Hitchcock, Jr., The Sale of promissory Notes Under Revised Article 9: Cooking Securitization Stew, 117 BANKING L. J. 99 (Apr./May 2000); S. Schwarcz, The Impact on Securitization of Revised UCC Article 9, 74 CHICAGO-KENT L. REV. 947 (1999) (avail. at

    Therefore, if the note is sold as opposed to negotiated, or used as security in a secondary market transaction, Article 9 is what controls that sale – UCC 9-203(b). And the mortgage follows said sale of the note in that transaction under UCC 9-203(g).

    If you are merely a PETE enforcing your rights under the instrument as a result of Article 3 negotiation or transfer, you may only seek a judgment for the debt obligation merged into the instrument – UCC 3-310(b)(3). Said judgment will then be enforced as a general lien against any property of the debtor – real or personal – until the judgment is satisfied.

    If you are claiming to be an owner of a note as a result of a purchasing it in the secondary market as opposed to negotiation under Article 3 – as is the case in securitization bulk transfers – it is an Article 9 transaction and you can either enforce your rights under the note as a PETE under Article 3 and get a judgment for the debt obligation OR enforce the specific lien you already own against the property under Article 9 and then get a deficiency judgment for any balance remaining not covered by the enforcement of your specific lien. UCC 3-310(b)(4). However, if you can’t prove up the entire chain of purchase – including your own – under UCC 9-203(b) you cannot enforce the mortgage without being able to prove your right to enforce the debt obligation as a result of payment for that right.

    Article 9 controls the sale of the “note” that is “sold” in a securitization transaction and the rights of the mortgage follow that Article 9 sale under 9-203(g).

  37. My question to Storm has been simply stated: have you found any NY case law that is aligned with the case law that you have cited below, that holds that UCC Art. 9 does not apply to mortgages. I am in NY so this would be helpful information to me.

    As for standing, I have to agree with Brian. See these NY cases: Bank of N.Y. v. Silverberg, 86 AD3d 274 [2nd Dept. 2011]) and Silverberg v. Bank of New York Mellon, 65 AD3d 1193 (2nd Dept. 2018). Silverberg got a free house because Bank of New York couldn’t prove standing, and the statute of lims had expired so the bank couldn’t refile suit.

  38. @ Storm ,

    You’re going to lose all credibility if you stick to your assertion that Standing is not a valid defense and is a “waste of time and money” ,, How else do you attack a stranger with no standing? Do you allow their lies to stand and then try to attack a ghost?

  39. I’d like to know where you want to go with this too, Bob. Scratching my head on some of this. Almost sure of appraisal fraud on mine, issues with substitute trustees (certain on that, and I actually think they used people who are not licensed attorney’s…a guy named Nick Forney, no license in any state I could find), learning about truth in lending, that’s a maybe with modification, stay issue from a federal court-with parties going to another court at the same time, company in bankruptcy, etc…not sure about some of this. Anyone here know the rules for some of this, feel free, respond?

  40. Bob G, have to head out for the evening, but will be in 7:00 AM until 1:00 PM tomorrow.

    If you could formulate a question, based on what you’re trying to accomplish that i can answer that would be helpful. Because all of these arguments based on securitization, assignment, standing etc.,., etc. are only a waste of time and money, and if that’s all you’ve got, you can kiss your home goodbye!

  41. ok, thank you. all the holdings in your case cites state that the UCC Art. 9 doesn’t apply to mortgages. But none of those cites are NY cites. presumably your a westlaw or lexis subscriber, and i’m wondering if you came across any NY law or case cites that hold the same. thank you.

  42. Bob G, no need to be so formal, call me Storm.

    Most of the post is double talk and useless rhetoric. What specifically would you like know regarding NY law?

  43. Mr. Bradford…do you have any NY law on this subject? Thank you.

  44. More Nonsense.

    “First, UCC ARTICLE 9 DOES NOT APPLY TO MORTGAGE TRANSACTIONS. See U.C.C. 9-109(d); HRS § 490:9-109(a)(1) (Article 9 applies to “[a] transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract”); see also In re Cabebe, 2016 WL 5844484, at *8 (Bankr. D. Haw. Oct. 5, 2016) (noting that the UCC “does not apply to mortgages and other interests in real property”) (citing Bank of Hawaii v. Davis Radio Sales & Service, Inc., 6 Haw. App. 469, 479 (1986)); In re Endresen, 548 B.R. 258, 269 (B.A.P. 9th Cir. 2016), appeal dismissed (July 1, 2016) (“Article 9 of the UCC does not apply to the `creation or transfer of an interest in or lien on real property . . . and the proceeds thereof.’ Put simply, it does not govern trust deeds and mortgages.”). BURKE v. COUNTRYWIDE MORTGAGE VENTURES, LLC, Dist. Court, D. Hawaii 2017.

  45. Again. How does a Servicer , SLS, file a fraudclosure complaint as Plaintiff, when Freddie Mac is the supposed owner , investor, or whatever made up name they call themselves ????
    They lent nothing. They owned nothing. They paid nothing.
    Fraudclosure should be thrown out immediately !!!!

    This country needs a foreclosure moratorium ASAP.

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