This dispute is governed by Article 9 of the Vermont UCC, which covers secured transactions. Article 9 provides that a creditor has a secured interest in collateral when the interest attaches, meaning “when it becomes enforceable against the debtor with respect to the collateral.” 9A V.S.A. § 9-203(a). In general, a security interest becomes enforceable against the debtor when “value has been given,” “the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party,” and one of four specified evidentiary conditions is satisfied. Id. § 9-203(b). “These minimal prerequisites lessen the probability of future misunderstandings, prevent collusion and misrepresentation and provide information to third parties who may be bound by the existence of a security interest.” Finley v. Williams,142 Vt. 153, 155, 453 A.2d 85, 86 (1982). [e.s.]
Berkshire Bank v. Kelly, 2023 Vt. 2, 4 (Vt. 2023)
Berkshire Bank v. Kelly, 2023 Vt. 2, 9 (Vt. 2023) (“Because defendant’s Merrill Lynch account was never within plaintiff’s control, it did not fall within the description of collateral contained in the parties’ pledge agreement, and no security interest ever attached to the account. The civil division therefore correctly granted summary judgment in favor of defendant.”)[e.s.]
So that is three Supreme Court decisions so far. Faking the security interest, the collateral, or the interest in the described collateral is not a substitute for an enforceable lien — equitable or legal.
It is no secret why the big banks are laying off a lot of people. The game may be coming to an end wherein they enter the lending marketplace without being a lender or creating a loan account, much less transferring it. For a while, everyone was willing to accept the argument that it MUST be real. No more!
Homeowners who are properly represented by attorneys willing to go “to the mats” will find themselves in the driver’s seat fielding offers to reform the traction they thought was a loan and forgive the fact that none of the legal prerequisites for a loan were present including (in refi’s) payment.
But it will always remain true that if the right defense is not raised and litigated at the right time, the lawyers will win and divide the spoils amongst the fake foreclosure players.
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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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Thanks Neil – here’s the case Berkshire v Kelly
https://scholar.google.com/scholar_case?case=16965959599321286&q=Berkshire+Bank+v.+Kelly&hl=en&as_sdt=6,39
Charles Reed – great points.
What I got is Wells regulator looking the Assignment of DOT which was done over a year after Washington Mutual Bank (WAMU) stopped existing and no sale of the debt ever occurred to another when WAMU existed. Wells first claimed it had paid value for the loan in the assignment, but changed it story to Ginnie Mae was the “Investor”, which in terms of foreclosure rules in the State of Nebraska means entity that purchased the debt! However, Ginnie Mae does not buy or sell any mortgage loans!
MERS list in their system that Ginnie is the investor of all Ginnie pooled loans, but Ginnie who is involved in this ruse claim the reason for the investor title is that it save MERS from creating another data category. However, this investor language act to allow a non-judicial foreclosure where Wells is put into tile on the lien claiming they are acting for the debt holder while being the mortgage servicer.
My challenge also is how does a mortgage servicer act for a lender that no longer exist. I get there was a mortgage servicing rights sale between the two, however, once the bank no longer exist and is not due a payment, then there is no servicing. This is a situation that WAMU cannot come back from the dead and call the loan due, so if there not a sale of the debt before they stop existing there not an entity that can come forward as the owner and call the debt due!
Wells has made up some stupid logic that they as servicer can place itself as the named owner of the debt, while hiring attorneys to represent Wells not represent WAMU. Wells sells the property at the foreclosure sale and proceeds don’t go to WAMU because it is dead, and instead goes to Ginnie Mae who not invested a single cent in the loan!