The Sexy Promissory Note: Foreclosures and the Missing NoteSubmitted by bobbyw24 on Wed, 11/17/2010 - 13:35
A mortgagor is having trouble making payments and wants to work out a new payment schedule, but has trouble finding out who is the entity currently holding the mortgage (payments are sent to a mortgage servicing company, which has been non-helpful). Finally the mortgagor gets a notice from the current holder of the mortgage (an assignee), threatening foreclosure unless all missed payments are made and late fees paid as well. The mortgagor can’t do this, so the assignee files suit to foreclose. One problem with this lawsuit is that while the plaintiff can prove the mortgage was assigned to it (there is a central registration system—MERS, see below—so this part is sometimes easy), but does not possess the original promissory note, which no one seems to be able to find. The assignee (perhaps, but not always) does have a copy of the original promissory note, which it attaches to the complaint in a judicial foreclosure action.
Why doesn’t the current assignee of the mortgage have the promissory note?
THE UNIFORM COMMERCIAL CODE:
The relevant UCC sections, which we will explore one by one in the text following them, are:
§ 3-412. Obligation of Issuer of Note or Cashier's Check.
The issuer of a note . . . is obliged to pay the instrument (i) according to its terms at the time it was issued . . . . The obligation is owed to a person entitled to enforce the instrument . . . .
§ 3-301. Person Entitled to Enforce Instrument.
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