The note is evidence of the debt and the terms of repayment. It is not the debt itself

Posted on March 12, 2021 by Neil Garfield

The only way that the note can be used in any claim for administration, collection or enforcement is if it is evidence of an existing underlying obligation. It is the underlying transaction, not the note, that creates the liability of the maker of the note. If it were otherwise nobody could trust any note and they would all be discounted 99%. Recipients of the note must be extremely confident that the maker will not disclaim the transaction or the liability.

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The only exception to that immutable rule is a provision in the UCC that says that if the original note has been delivered to a buyer who paid value for it, they might be able to enforce it against the maker (homeowner) of the note. The three conditions are (1) that the payment was to the owner of the note (i.e. one who had paid value for it to the originator of the real-world transaction, or legal successor of the originator) (2) the buyer was unaware of the maker’s defenses and (3) the buyer was acting in good faith.
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That said, presentation of the original note or a copy with an affidavit of authenticity is sufficient to plead a case even when the underlying obligation has been eliminated or extinguished and nobody paid for it. If the pleading is unopposed, judgment will be rendered to the pleader.

Filed under: foreclosure |

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4 Responses

  1. ANON, on March 13, 2021 at 10:42 am said:

    The difference between credit card securitization and the “crisis” securitization is that credit cards start out on banks balance sheet accounting books. In valid securitization, accounts are removed from on-balance sheet books to off balance sheet conduits. When in default, the accounts are placed back onto balance sheet accounting books, and usually charged off in 180 days, and sold to debt buyers. With crisis account securitization, there was no starting point for the accounts – they went straight to off-balance sheet conduits (ie straight to debt buyers). There was no “mortgage.” Thus, when crisis hit, these accounts could not be taken back onto accounting books, and, hence, the bail out. Credit cards, however, are not secured with a home’s value (a mortgage). Thus, the crisis loans securitization, without any accounting starting point, could not have been secured by the home. So – Java is correct. Unsecured, and nothing more – just like a credit card – only worse as there was no accounting to begin with.

  2. Summer, on March 13, 2021 at 4:16 am said:

    Credit Card is also not debt. It is a subject of securitization and nobody maintain any accounts receivable for it.

    So, secured or not secured – it is NOT a debt.

  3. don, on March 12, 2021 at 6:53 pm said:

    That said, presentation of the original note or a copy with an affidavit of authenticity is sufficient to plead a case even when the underlying obligation has been eliminated or extinguished and nobody paid for it. If the pleading is unopposed, judgment will be rendered to the pleader.

    MAYBE I;M MIS READING THIS, BUT WITH THIS, THERE IS NO HOPE TO STOP THE CORRUPTION

  4. Javagold, on March 12, 2021 at 2:58 pm said:

    UNSECURED !!!!!…. Nothing more. Just like a credit card.

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