“Had A Note”ourlemon.com/docs/OHAN.pdf · 2010-12-23 · Update Tracking Lender 3 Depositor MBS Lender 4 Trustee MBS Mortgage Backed Securitization Negotiation by E-Note (Electronic)

© Copyright 2010 j.mcguire P O Box 1352, Beford, Texas 76095‐1352 Page 1

“Had A Note” For those that wish to have the Original

“Have a Note” it is Available for Direct

Download From the Following

Author Approved Sites http://www.ourlemon.com/nshan%20fa.pdf

Page 1 of 37 8/16/10

Copyright 2010 by j.mcguire P.O. Box 1352 Bedford, TX 76095-1352 [email protected] Page 1 of 1

Case Closed: eNotes are Not Legal

Incorrect Analysis of eNote Enforceability Nationwide Mortgage Industry Standards Maintenance Organization (MISMO, a registered service mark of the Mortgage Bankers Association), Electronic Signature Records Association, and the American Land Title Association released a White Paper1 titled “Case Closed: eNotes Are Legal”. The White Paper’s “Disclaimer” notes that “the authors and their organizations accept no responsibility for errors and omissions”.

The Error: eNotes are Not Legal

The Omission: 15 USC 7003

“UETA and ESIGN’s approach is noteworthy in that neither statute attempts to insert the concept of a transferable record into the UCC. Instead, UETA and ESIGN exclude from their scope most of the UCC…” page (3). The Conclusion of the White Paper incorrectly states: “UCC Article 3 provisions for promissory notes were not designed for use with electronic records. Rather, ESIGN and UETA were enacted to create the legal framework or a parallel structure for the electronic equivalent of a paper promissory note, known as a “transferable record”. As a result, an eNote that is created stored and maintained as required under ESIGN and UETA is a valid, enforceable and negotiable debt obligation.” The White Paper itself states that ESIGN and UETA both exclude the Uniform Commercial Code (UCC)– Article 3 – which governs Negotiable Instruments. The authors then attempt to persuade the reader that ESIGN and UETA provide sufficient governing laws to support the existence and the enforceability of an eNote. As ESIGN and UETA both exclude UCC Article 3 and the UCC was not designed for and currently does not allow for eNotes, eNotes lack supporting law to exist.

MISMO’s current day to day operations falls under the MERS umbrella.

ENotes are “Not Legal”

Under the ESign Act or the Uniform Commercial Code ESign 15 USC 7003 excludes the Uniform Commercial Code Article 3

1http://www.mbaa.org/files/ResourceCenter/emortgage/eNoteWhitePaper.pdf

Page 2 of 37 8/16/10

Copyrighted 2010 j.mcguire P O Box 1352, Bedford, Texas 76096‐1352 [email protected] Page 1

Legal-Legal-Legal “E-Notes are Legal”

“No they’re not”

Being young and without wisdom and knowledge many believed the Tooth Fairy and the Easter Bunny were real. We were told they were real and we believed.

We shall not include Santa Claus as the author still believes in what Santa Claus and

Christmas stands for.

Wisdom and Knowledge

Does the average bank teller have any idea their employer may be a part of the biggest fraud in history, No.

Does the average real estate broker have any idea the banks they deal with may be a part of the biggest fraud in history, No.

Does any average person have any idea they may be a part of the biggest fraud in history, No.

Compartmentalization of employees is what has aided in the biggest fraud in history to be accomplished. Cubicle A, Cubicle B, Cubicle C have all been told their actions that are

preformed are in legal compliance. They believe.

The front line employee has no idea that their actions aid in perpetuating the biggest fraud in

history. They believe.

My computer says the electronic negotiable note is here so they believe it’s real… No it’s not.

Electronic Negotiable Notes (E-Notes) are legal. No they’re not. That’s what they want us to believe.

E-Sign 15 USC 7003 excludes Uniform Commercial Code Article 3 – Negotiable Instruments

So just like with the Tooth Fairy and the Easter Bunny we learn through wisdom and knowledge that E-Notes are not real. (Lacks supporting laws)

Page 3 of 37 8/16/10

Lender 2BankSeller

Securitizer

Lender 3Depositor

ToTrust

Lender 4Trustee

For the BenefitOf the Trust

E-Sign ActBook Entry

Scan Copy/ElectronicAssignment of Electronic

Negotiable Instrument

Servicer’sRecords Vault

Holder ofPaper

Documents

Scan/Copy


Assignment of ElectronicNegotiable Instrument



Invalid use of E-Sign Act - 15 USC 7001

15 USC 7003The provisions of section 7001 of this title shall not apply to a contract or other record to the extent it is

governed by—(3) the Uniform Commercial Code, as in effect in any State, other than sections 1–107 and 1–206 and

Articles 2 and 2A.

Lender 1Originator

Mortgage Loan PoolSwap

Trust Certificates

Pooling & ServicingAgreement

AgentOr

IndependentContractor

Direction&

Control

Non-Innocent Purchaser

TransferOf Custodial

Rights


Rights


Rights

Lender 4Custodian




Non ComplianceUCC Article 3 3-203

Invalid use E-Sign Act







Copyright J McGuire 2009 [email protected]

Page 4 of 37 8/16/10

Lender 2Bank

Seller toFannie Mae

Lender 3Fannie MaeSecuritizer

Trusts

Lender 4Custodian



Scan Copy/ElectronicAssignment of Electronic

Negotiable Instrument

ServicerRecords Vault

HolderPaper

Documents

Scan/Copy

Single-Family MBS ProspectusGuaranteed Mortgage Pass-Through Certificates

(Single-Family Residential Mortgage Loans)

Mortgage PoolsWe require each mortgage loan to meet our published standards for loans that we purchase, except to the extent

that we have permitted variances from those standards. We may change our standards from time to time.

UCC 3-203TRANSFER OF INSTRUMENT

RIGHTS ACQUIRED BY TRANSFER(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the

instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.








Lender 1Originator

Mortgage Loan PoolSwap

Trust Certificates

Fannie MaeContractualGuidelines

AgentOr

IndependentContractor

Direction&

Control

Non-Innocent Purchaser


Rights


Rights


Rights

Page 5 of 37 8/16/10

OriginalPromissory

Note

ABCServicer

Lender 1OriginatorScan/Copy/

Store

XYZServicer

Vault

Paper Note

DocumentCustodian

Lender 2SellerMBS

TransfersServicing Rights

TransferOwnershipBy E-Note

NegotiationE-Note

NON-ComplianceUniform

CommercialCode

RegisterElectronicTracking

OwnershipServicing

RegisteredTrackingSystem

UpdateTracking

Lender 3Depositor

MBS

Lender 4Trustee

MBS

Mortgage Backed SecuritizationNegotiation by E-Note (Electronic)

Securities RegisteredElectronic Tracking

Cede & Co., Clearstream,

Euroclear

UpdateTracking Update

TrackingUpdate

Tracking

HomeownerContactLimited

To Servicer

SecuritiesCertificates

OwnerPromissory Notes

PromissoryNotes

SwappedFor

SecuritiesCertificates

Promissory NotesHeld in Trust forThe Benefit of theCertificateholders

Lacks EndorsementsPer UCC

DefaultWithdrawal

PerPSA

Agreement

WithdrawPromissory

NoteFrom Securities

Contractual

DefaultReferredLaw Firm

Legal Action

OriginalPromissory

NoteRetrieved

CourtEvidence

Non-Negotiated Promissory NoteLost Note Affidavit with

Printed Out Graphic Image

Paper Note v Electronic Note

Page 6 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

PromissoryNote

LoanOriginatorObligee 1

ObligorExecutes

PromissoryNote toObligee

SecurityInstrument


ObligorExecutesSecurity

Instrumentto

Obligee

Rec

orda

tion

Stat

utes

Public Records

Deed of TrustRecordedValid Lien

SellerSecuritizer

OfTrust

Obligee 2

SellerSecuritizer

OfTrust

Obligee 2C

ontr

actu

ral

Pool

ing

Serv

icin

gA

gree

men

t

NotRecorded In

Public Records

Obligee 1Assigns

NoteTo

Obligee 2

Obligee 1AssignsSecurity

InstrumentTo

Obligee 2

DepositorTo

TrustObligee 3

DepositorTo

TrustObligee 3

Obligee 2Assigns

NoteTo

Obligee 3


InstrumentTo

Obligee 3

BankTrustee

ForTrust

Obligee 4

Obligee 3Assigns

NoteTo

Obligee 4


InstrumentTo

Obligee 4

BankTrustee

ForTrust

Obligee 4

BankCustodian

ForTrust

Obligee 5

Obligee 4Assigns

NoteTo

Obligee 5


InstrumentTo

Obligee 5

BankCustodian

ForTrust

Obligee 5

BankTrustee

ForTrust

Obligee 6

BankTrustee

ForTrust

Obligee 6

Notice of AssignmentTransfers Owner IdentityInvalid Transfer of Lien

Validity

BankCustodian

ForTrust

Obligee 5

Obligee 5Assigns

NoteTo

Obligee 6


InstrumentTo

Obligee 6

BankCustodian

ForTrust

Obligee 5

ElectronicRecordation

MERS

Law Firm


Validity

Printed Out CopiesPromissory Note

Security Instrument


Validity


Validity


Validity

Law Firm

CopiesPromissory Note or Lost Note Affidavit

Security Instrument

CourtOpinion

PerpetuatesFraud on

Wall Street

Rules in FavorOf Obligee

DischargeDebt

Obligation

Rules in FavorOf Obligor

Discharge of Debt ObligationOr

Perpetuates Fraud on Wall Street

Page 7 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

PromissoryNote


ObligorExecutes


SecurityInstrument



Instrumentto

Obligee

Rec

orda

tion

Stat

utes

Public RecordsPerfected Lien

SellerSecuritizer

OfTrust

Obligee 2

SellerSecuritizer

OfTrust

Obligee 2C

ontr

actu

ral

Pool

ing

Serv

icin

gA

gree

men

t

NotRecorded In

Public Records

Obligee 1Assigns

NoteTo

Obligee 2

SecurityInstrument

Assignment MERSNon MOM

DepositorTo

TrustObligee 3

DepositorTo

TrustObligee 3

Obligee 2Assigns

NoteTo

Obligee 3

Security InstrumentSeparated From NoteRegistered E-Registry

BankTrustee

ForTrust

Obligee 4

Obligee 3Assigns

NoteTo

Obligee 4

E-RegistryUpdated

BankTrustee

ForTrust

Obligee 4

BankCustodian

ForTrust

Obligee 5

Obligee 4Assigns

NoteTo

Obligee 5

E-RegistryUpdated

BankCustodian

ForTrust

Obligee 5

BankTrustee

ForTrust

Obligee 6

BankTrustee

ForTrust

Obligee 6


Invalid Lien

BankCustodian

ForTrust

Obligee 5

Obligee 5Assigns

NoteTo

Obligee 6


InstrumentTo

Obligee 6

BankCustodian

ForTrust

Obligee 5


MERSNon-Perfected Lien

Law Firm

Registration on MERSPromissory Note

Security InstrumentInvalid Transfer of Lien

Invalid Lien


Invalid Lien


Invalid Lien


Invalid Lien

Court


Security Instrument

CourtOpinion

PerpetuatesFraud on

Wall Street


DischargeDebt

Obligation




Bank As TrusteeObligee 6MortgageServicer


Security Instrument

RegisterationTracking

Deed of TrustRecorded

ForeclosureClauseDeed of

Trust(Trigger)

PerfectedLien


Trust(No Trigger)

UnperfectedLien


Trust(No Trigger)

UnperfectedLien

UnperfectedLien

UnperfectedLien

UnperfectedLien

UnperfectedLien

Page 8 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

PromissoryNote


ObligorExecutes


SecurityInstrument



Instrumentto

Obligee

Rec

orda

tion

Stat

utes

Public RecordsMERS

Beneficary

SellerSecuritizer

OfTrust

Obligee 2

SellerSecuritizer

OfTrust

Obligee 2

Con

trac

tura

lPo

olin

gSe

rvic

ing

Agr

eem

ent

NotRecorded In

Public Records

Obligee 1Assigns

NoteTo

Obligee 2

DepositorTo

TrustObligee 3

DepositorTo

TrustObligee 3

Obligee 2Assigns

NoteTo

Obligee 3


BankTrustee

ForTrust

Obligee 4

Obligee 3Assigns

NoteTo

Obligee 4

BankTrustee

ForTrust

Obligee 4

BankCustodian

ForTrust

Obligee 5

Obligee 4Assigns

NoteTo

Obligee 5

E-RegistryUpdated

BankCustodian

ForTrust

Obligee 5

BankTrustee

ForTrust

Obligee 6

BankTrustee

ForTrust

Obligee 6


Invalid Lien

BankCustodian

ForTrust

Obligee 5

Obligee 5Assigns

NoteTo

Obligee 6

BankCustodian

ForTrust

Obligee 5



Law Firm


Invalid Lien


Invalid Lien


Invalid Lien


Invalid Lien

Court


Security Instrument

CourtOpinion

PerpetuatesFraud on

Wall Street


DischargeDebt

Obligation




Bank As TrusteeObligee 6MortgageServicer


Security Instrument

RegisterationTracking


Invalid LienMERS MOM

Loan


Trust(No Trigger)

UnperfectedLien


Trust(No Trigger)

UnperfectedLien


Trust(No Trigger)


Trust(No Trigger)


Trust(No Trigger)

E-RegistryUpdated

E-RegistryUpdated

E-RegistryUpdated

Page 9 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

ObligorSigns

PromissoryNote

Obligee 1Takes

PossessionNegotiableInstrument

NoYes

OriginalObligee 1Maintains

PossessionPromissory Note

MaintainsServicing

&Collection

Returns NoteUpon FullPayment

ObligorSigns

Deed of Trust

RecordationPublic Land

Records Office Creates

Valid Lien

Notice of AssignmentFrom ObligorTo Obligee 1

Obligee 1Assigns Note

ToObligee 2

(Securitizer)Release of Lien

Filed with Public LandRecords Office


Records Office TransfersValid Lien

Negotiation RequiresCompliance with

Uniform Commercial Code Article 3

SecuritizerAssigns Note

ToObligee 3

(Depositor)

DepositorAssigns Note

ToTrustee for Trust

TrusteeAssigns Note

ToTrust (MBS)







Notice of AssignmentObligee 1 to Securitizer

Notice of AssignmentSecuritizer to Depositor

Notice of AssignmentDepositor to Trustee

Notice of AssignmentTrustee to Trust (MBS)

Assignment

Assignment

Assignment

Trust (MBS)Assigns Note

ToTrustee




Assignment

Law Firm

Temporary Transfer of Note

Deed of TrustHolder

Holder in Due CourseRights to Enforce

Non-JudicialForeclosure

TrusteeSale


Records Office

Substitute TrusteeSale Recorded

3rd Party PurchaseREO Property

Required AssignmentsEnforcement Rights

Holder in Due Course

Page 10 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

ObligorSigns

PromissoryNote

Obligee 1Takes


NoYes

OriginalObligee 1Maintains

PossessionPromissory Note

ObligorSigns

Deed of Trust



Valid Lien

Notice of AssignmentFrom ObligorTo Obligee 1

Obligee 1Assigns Note

ToTrustee

Negotiation RequiresCompliance with

Uniform Commercial Code Article 3


Records Office Invalid Filing

Notice of AssignmentObligee 1 to Trustee

Law Firm

Temporary Transfer of Note

Deed of TrustLacks Holder

Holder in Due CourseRights to Enforce


TrusteeSale


Records Office


3rd Party PurchaseREO Property

Actual Assignments

Page 11 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

PromissoryNote

WAMU

WAMUTakes


Deed of Trust



Valid Lien

Notice of AssignmentDeed of Trust

WAMUAssigns Note

To(Securitizer)

Unknown


Records Office Transfers

Maintains Valid Lien


SecuritizerAssigns Note

To(Depositor)Unknown

DepositorAssigns Note

ToTrustee for Trust

TrusteeAssigns Note

ToTrust (MBS)










Notice of AssignmentWAMU to Securitizer




UCC Assignment

UCC Assignment

UCC Assignment

FDICReceivership

Deed of TrustForeclosure Clause

Upon Default ofDebt Obligation


TrusteeSale


Records Office


Required AssignmentsTo Maintain Holder in Due Course

And Rights to Enforce

JP Morgan ChaseTrustee

Trust (MBS)Assigns Note

ToJP Morgan Chase

Trustee

Notice of AssignmentTrust (MBS) to Trustee

UCC Assignment

TriggerForeclosure

Clause inDeed of Trust

12 USC 1821 (d) (2) (A) (i)

12 USC1821 (d) (2) (A) (i)

TITLE 12 > CHAPTER 16 > § 1821 (d) Powers and duties of Corporation as conservator or receiver(2) General powers (A) Successor to institution The Corporation shall, as conservator or receiver, and by operation of law, succeed to—

(i) all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution; and (ii) title to the books,

records, and assets of any previous conservator or other legal custodian of such institution.

9-10-2009 JM

Update Public LandRecords Office to

Maintain Valid LienTexas Property Code11.001-12.001-13.001

Page 12 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

PromissoryNote

WAMUTakes


Deed of Trust



Valid Lien

WAMUAssigns Note

To(Securitizer)

Unknown



(Not Recorded)


SecuritizerAssigns Note To

(Depositor)Non Holder in Due

Course

DepositorAssigns Note ToTrustee for Trust

Non Holder in Due Course

TrusteeAssigns Note

ToTrust (MBS)




(Not Recorded)



(Not Recorded)



(Not Recorded)

Notice of AssignmentWAMU to Securitizer




Assignment

Assignment

Assignment

FDICReceivership


Deed of TrustForeclosure Clause

Upon Default ofDebt Obligation


TrusteeSale


Records Office


Actual Assignments“NO” Holder in Due Course

“NO” Rights to Enforce

JP Morgan ChaseTrustee

Trust (MBS)Assigns Note ToJP Morgan Chase

TrusteeNon Holder in Due

Course

Notice of AssignmentTrust (MBS) to Trustee

Assignment

TriggerForeclosure

Clause inDeed of Trust

12 USC 1821 (d) (2) (A) (i)

12 USC1821 (d) (2) (A) (i)

TITLE 12 > CHAPTER 16 > § 1821 (d) Powers and duties of Corporation as conservator or receiver(2) General powers (A) Successor to institution The Corporation shall, as conservator or receiver, and by operation of law, succeed to—

(i) all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution; and (ii) title to the books,

records, and assets of any previous conservator or other legal custodian of such institution.

Update Public LandRecords Office to

Maintain Valid LienTexas Property Code11.001-12.001-13.001

Non Compliance

AssignmentDeed of Trust

Recorded

9-10-2009 JM

Page 13 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

PromissoryNote

Lender 1Originator

Deed of Trust

PublicRecords

ObligorLender 2

(SellerSecuritized

Trust)

Lender 3(Depositor

Trust)

OwnerHolder

NegotiableInstrument

Owner of NoteHolder of Note

Per PSA


Per PSA

(MERS)MortgageElectronic

RegistrationSystem

BankAs

Trustee(Trust)

TrusteeHolder of Note

TrustOwner of Note

Per PSA

BankAs

Custodian(Trust)

SwapNegotiable

Instruments

Certificates

CustodianHolder of Note

TrustOwner of Note

Per PSA

BankAs

Trustee(Trust)

TrusteeHolder of Note

TrustOwner of Note

Per PSA

NoteUCC

Article 3

DeedUCC

Article 9

Identity

MERS

Note

MOMLoan

MERSRegistered

Note Note Note Note

Lender 2(Seller

SecuritizedTrust)

Lender 3(Depositor

Trust)

BankAs

Trustee(Trust)

BankAs

Custodian(Trust)

BankAs

Trustee(Trust)


RegistrationSystem


RegistrationSystem


RegistrationSystem

Law firmLitigation

Assignor Assignor

AssigneeAssignee

Assignor

Assignee

LegalAction

Not RecordedPublic Records




Recorded Public RecordsFraudulent Filing

Bank XXX as Trustee for ZZZ Trust

Page 14 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

PromissoryNote

Lender 1Originator

Deed of Trust

PublicRecords

ObligorLender 2(Seller

SecuritizedTrust)

Lender 3(Depositor

Trust)

OwnerHolder

NegotiableInstrument


Per PSA


Per PSA


RegistrationSystem

BankAs

Trustee(Trust)Trustee

Holder of NoteTrust

Owner of NotePer PSA

BankAs

Custodian(Trust)

SwapNegotiable Instruments

Certificates

CustodianHolder of Note

TrustOwner of Note

Per PSA

BankAs

Trustee(Trust)Trustee

Holder of NoteTrust

Owner of NotePer PSA

NoteUCC

Article 3

DeedUCC

Article 9

Identity

MERS

Note

MOMLoan

MERSRegistered

Note Note Note Note

Lender 2(Seller

SecuritizedTrust)

Lender 3(Depositor

Trust)

BankAs

Trustee(Trust)

BankAs

Custodian(Trust)

BankAs

Trustee(Trust)


RegistrationSystem


RegistrationSystem


RegistrationSystem

Law firmLitigation

Assignor Assignor

AssigneeAssignee

Assignor

Assignee

LegalAction





Recorded Public RecordsFraudulent Filing

Bank XXX as Trustee for ZZZ Trust

MERS for Lenders and Assigns (Non Holder or Owner of the “Note”)

Page 15 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

First Horizon Home Loan Corporation

General Warranty Deed

AssignmentFirst Horizon Home Loan

toNovastar Mortgage, Inc.

AssignmentNovstar Mortgage, INC by

Saxon Mortgage by Attorney in FactTo

Bank of New York MellonAs successor Trustee

Novastar Mortgage Funding Trust Series 2005-1

First Horizon Home Loan Corporation

General Warranty Deed

AssignmentFirst Horizon Home Loan

toNovastar Mortgage, Inc.

7/29/2005

Novastar Mortgage, Inc.To Securitizer if not

Novastar

SecuritizerTo Depositor

Per Pooling and Servicing Agreement

DepositorTo BNYM as Trustee

BNYM as TrusteeTo Certificate Holders


AssignmentRecorded in Public Land

Records

AssignmentNot

Recorded in Public Land

Records

AssignmentNot


Records

AssignmentNot


Records

AssignmentNot


Records

UCC Assignment

Non ExecutedUCC Assignment

Actual UCC Assignment

ActualNon Valid

UCC Assignment

AssignmentRecorded in Public Land

Records

InvalidAssignmentRecorded in Public Land

Records

Certificate HoldersTo BNYM as Trustee


AssignmentNot


RecordsLaw Firm TakesTemporary Custody

HolderHolder in Due Course/Right of

Enforcement

Jurisdiction of the Court

DefaultOf Note

Obligor

Actual Assignments

Required Assignments





Valid Lien

Invalid Lien

Invalid Lien

Invalid Lien

Invalid Lien

Invalid Lien

Names Are Not Included to Protect the Innocent

Page 16 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

Issue of InstrumentPromissory Note

UCC 3-105

Originator(Lender 1)

ObligorHomeowner

Lender 2(Seller)

To FNMA)

Transfer of InstrumentUCC 3-203

Lender 3(FNMA)


Lender 4MBS

Collateral

Transfer of InstrumentUCC 3-203 Contractual Parties

Fannie Mae Guidelines


RIGHTS ACQUIRED BY TRANSFER

(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the

transferee any right of the transferor to enforce the instrument, including any right as a holder

in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder

in due course if the transferee engaged in fraud or illegality affecting the instrument.

MortgageServicer

NoticeAllegedDefaultObligor

NoticeAcceleration

Default

NoticeAcceleration

Default

LawFirm

Non-CompliantDocuments

JudicialForeclosure

Action

Non-Judicial

NUMBER 13-04-135-CVCOURT OF APPEALS

THIRTEENTH DISTRICT OF TEXASCORPUS CHRISTI B EDINBURG

FIRST NATIONAL ACCEPTANCE COMPANY,Appellant,

v.DEOLA BISHOP,

Appellee.On appeal from the 357th District Court

of Cameron County, Texas.O P I N I O N

Before Chief Justice Valdez and Justices Hinojosa and Yanez

Page 17 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

Issue of InstrumentPromissory Note

UCC 3-105

Originator(Lender 1)

ObligorHomeowner

Lender 2(Securitizer)


Lender 3(Depositor)


Lender 4(Trustee)

Transfer of InstrumentUCC 3-203 Contractual Parties

Pooling & Servicing Agreement


RIGHTS ACQUIRED BY TRANSFER

(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the

transferee any right of the transferor to enforce the instrument, including any right as a holder

in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder

in due course if the transferee engaged in fraud or illegality affecting the instrument.

MortgageServicer

NoticeAllegedDefaultObligor

NoticeAcceleration

Default

NoticeAcceleration

Default

LawFirm

Non-CompliantDocuments

JudicialForeclosure

Action

Non-Judicial

NUMBER 13-04-135-CVCOURT OF APPEALS

THIRTEENTH DISTRICT OF TEXASCORPUS CHRISTI B EDINBURG

FIRST NATIONAL ACCEPTANCE COMPANY,Appellant,

v.DEOLA BISHOP,

Appellee.On appeal from the 357th District Court

of Cameron County, Texas.O P I N I O N

Before Chief Justice Valdez and Justices Hinojosa and Yanez

Page 18 of 37 8/16/10

Administrator

Typewritten Text

Copyrighted

PromissoryNote

ObligorExecutes


SecurityInstrument


Instrumentto

Obligee

RecordationStatutesPublic

Records

ContractualPooling

ServicingAgreement


Securities

ElectronicRegistration


BankCustodian

ForTrust

Obligee 5

Obligee 4Assigns

NoteTo

Obligee 5

E-RegistryUpdated

BankCustodian

ForTrust

Obligee 5

BankTrustee

ForTrust

Obligee 6

BankTrustee

ForTrust

Obligee 6

Obligee 4Assigns

NoteTo

Obligee 5

E-RegistryUpdated


HIDC


SellerSecuritizer

OfTrust

Obligee 2

SellerSecuritizer

OfTrust

Obligee 2

DepositorTo

TrustObligee 3

DepositorTo

TrustObligee 3

Obligee 2Assigns

NoteTo

Obligee 3


BankTrustee

ForTrust

Obligee 4

Obligee 3Assigns

NoteTo

Obligee 4

E-RegistryUpdated

BankTrustee

ForTrust

Obligee 4

Note’sSecurity Instrument

Perfected Lien

UCCArticle

3

UCCArticle

9Recordin

gStatutes

Electronic Graphic Image

Paper Document

Electronic ConversionPaper to Electronic

E-Sign/UETANegotiable Instrument

Governed By UCC Art 3Excluded in E-Sign/UETA

Security InstrumentAllowable

ScannedNote

Not ValidUCC

ScannedSecurity

InstrumentAssignmentOf

Note

Notice OfAssigned Lien

Holder

E-RegistryUpdated

E-RegistryUpdate

AssignmentOf

NoteRegistryUpdate

AssignmentOf

NoteRegistryUpdate

AssignmentOf

NoteRegistryUpdate

AssignmentOf

NoteRegistryUpdate

MortgageServicer

ObilgorCourts

DefaultObligee

AffidavitsBased On

ReviewElectronicRecords

VerificationComputerGenerated

Data

FalseVerification

Non ComplianceRecordationContractual

PoolingServicing

Agreement

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Administrator

Typewritten Text

Copyrighted

©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Page 1

“AGNON / DODID” From the End to the Beginning

By J. McGuire

Closing

• We begin with the loan originator immediately after closing. The loan originator has taken possession of many documents of which only three (3) are required to be followed through to the securitization process. These three (3) documents are the “Warranty Deed,” the Paper Promissory Note and the Paper Security Instrument (Mortgage, Deed of Trust, Security Deed).

• The Warranty Deed contains the information that transfers the Title of the property from the

seller to the buyer (Homeowner). Title to the property is required to offer the property as security in the security instrument as collateral for the paper promissory note. The Warranty Deed is required to be filed in Public Records. The Warranty Deed is not governed under the Uniform Commercial Code or states’ equivalence and would be allowable under “eSign” to be filed in electronic form.

• The Paper Promissory Note: “a writing” in tangible form identifying an indebtedness

governed by the Uniform Commercial Code or the states equivalence identifying the obligor and obligee. If the Paper Promissory Note is to be a “Secured” indebtedness, the Security Instrument is also identified within the Paper Promissory Note. The Paper Promissory Note is governed by the Uniform Commercial Code Article 3 or the states’ equivalence, and “eSign”--15 USC 7003—which clearly excludes items governed by the Uniform Commercial Code Article 3 or the states equivalence and as such the indebtedness can be only in paper tangible form.

• The Security Instrument: if to be governed by the Uniform Commercial Code or the states

equivalence, the Security Instrument needs to be “a writing” in tangible form. If the Security Instrument is to be governed by the Uniform Commercial Code Article 9 or the states equivalence and “eSign”, 15 USC 7003 clearly excludes items governed by the Uniform Commercial Code Article 9 or the states equivalence then such security instrument can only be in paper tangible form.

• The Paper Promissory Note and the Security Instrument as combined and offered is a tangible interest in “Real Property.”

Step X – Scanning, Storage, Destruction and Filing

• The Paper Promissory Note and the Security Instrument are scanned into an electronic digitized graphic package and at the same time the data from both sets of documents is scraped of data and this data is placed into an electronic data file and combined with the electronic version of the promissory note and security instrument along with all other closing documents which then is identified as the “Mortgage Loan Package”.

• This “Mortgage Loan Package” would be an intangible interest in “Personal Property,” if it

were fully supported by law.

• As future legal actions were unanticipated, the paper documents were either placed in storage, (Custodial and Non-Custodial Custody) or deliberately destroyed.

Page 20 of 37 8/16/10


• The “Electronic Digitized Mortgage Loan File” is now falsely represented as the legal “Mortgage Loan Package.

• The electronic version of the Warranty Deed is electronically filed in Public Records; as this Warranty Deed is allowed to be in electronic form under “eSign,” the filing in Public Records is a lawful action.

• The electronic version of the Security Instrument is electronically filed in Public Records. If the obligee attempts to apply UCC laws of perfection to support legal claims within the security instrument then this filing would be unlawful. If the obligee uses the laws of local jurisdiction to support perfection the filing would be lawful.

o (Reader Note: Perfection of the Lien and Perfection for Priority are “not” one in the same.)

• If MERS is involved, registration on the MERS system is required, and when this registration

occurs, an 18 digit Mortgage Identification Number “MIN” is created. The first seven (7) digits identify the registering lender and the last digit is a checksum number.

The Paper Sale (In this New World of Electronic Securitization does not occur)

• The “Loan Originator,” (Assignor), offers the paper loan package under cover of a Bailee’s Letter to a perspective buyer. The recipient, (Assignee), of the Bailee’s Letter then must either accept the offering and tender funds and takes possession of the loan package, or refuse the offering in which case the Assignor retains ownership of the loan package. (Note: the Assignor could make the Note payable in blank and upon the Assignee’s accepting the Note the Assignee could fill in the blank assignment on the Note which would complete the negotiation.)

• Assignee, upon acceptance of the paper loan package, would file a “Notice of Assignment” in Public Records to show the negotiation of the Paper Promissory Note, thereby transferring perfected lien rights from the Assignor to the Assignee, and as such a continuous perfection of lien rights is maintained. Failure to file this financing statement (Notice of Assignment) would allow the perfection of the lien to expire and thus render the Security Instrument to a “Nullity.”

The First Electronic Sale/Assignment (Investment Vehicle as Example, Fannie/Freddie Similar)

• The “Loan Originator,” (Assignor), offers the electronic loan package to a perspective buyer or a prearranged line of credit lender. The Recipient, (Assignee, Seller/Securitizer of the Investment Vehicle), of the electronic loan package then must either accept the offering and tender funds and takes control of the electronic loan package, or refuse the offering in which case the Assignor retains control of the electronic loan package.

o (Note: as the electronic loan package is registered in the MERS Registry, there is no

physical transfer of the electronic loan package. The MERS Registry is updated as to who has control and ownership rights of the electronic digitized file of the non-lawful and intangible form of the electronic promissory note {eNote}.)

• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records

as such a filing would be unlawful as there is no law that supports an electronic negotiation of an electronic promissory note (eNote).

Page 21 of 37 8/16/10


The Second Electronic Sale/Assignment

• The “Seller/Securitizer of the Investment Vehicle,” (Assignor), sells/assigns the electronic loan package to the buyer, (Depositor of the Investment Vehicle). The recipient, (Assignee, Depositor of the Investment Vehicle), of the electronic loan package under the terms of the trust accepts the transfer and takes control of the electronic loan package.

o (Note: as the electronic loan package is registered in the MERS Registry, there is no physical transfer of the electronic loan package. The MERS Registry is updated as to who has control and ownership rights of the electronic digitized file of the non-lawful and intangible form of the electronic promissory note {eNote}.)



o (The author has noted several Qui Tam suits being filed claiming the local

governments have been defrauded by the failure to file these assignments and tender funds into public records. The suits making these charges are without merit.)

o (It is not uncommon to find in Public Records a “Notice of Assignment” filed

reflecting a transfer of lien rights from the Original Assignor to a 3rd subsequent Assignee(Trustee or Mortgage Servicer). In this scenario the perfection of lien rights “Perfected Chain of Title” does not match the match the “Chain of Negotiation” of the Paper Promissory Note, and, as such, proves the Paper Promissory Note and the Security Instrument are now bifurcated, which renders the Security Instrument a “Nullity.” These filings in public records are fraud upon public records.)

The Third Electronic Sale/Assignment

• The “Depositor of the Investment Vehicle,” (Assignor), sells/assigns the electronic loan package to the (Trustee of the Investment Vehicle). The recipient, (Assignee, Depositor of the Investment Vehicle), then takes control of the electronic loan package. The “Depositor of the Investment Vehicle,” in compliance with the Investment Trust’s documents, takes control of the Investment Trust’s Electronic Certificates in exchange for selling/assigning the electronic loan package to the Trustee of the Investment Vehicle for the benefit of the Certificateholders (The Swap).




The Fourth Electronic Sale/Assignment

• The “Trustee of the Investment Vehicle,” (Assignor), sells/assigns the electronic loan package to the (Custodian of the Investment Vehicle for the benefit of the Certificateholders). The Recipient, (Assignee, Custodian of the Investment Vehicle for the benefit of the Certificateholders), takes control of the electronic loan package.

• The “Depositor of the Investment Vehicle,” in compliance with the Investment Trust

documents, takes control of the Investment Trust’s Certificates, in exchange for selling/assigning the electronic loan package to the Trustee of the Investment Vehicle for the benefit of the Certificateholders who then are in control of the electronic mortgage package.

Page 22 of 37 8/16/10





Non Holder in Due Course Alleges Default (Trustee/Mortgage Servicer)

• “Trustee of the Investment Vehicle/Mortgage Servicer” declares default:

• Numerous actions of fraud are readily identifiable.

• As noted in the four (4) electronic negotiations of the electronic loan package to securitization, there is a lack of supporting law to allow electronic negotiation. Only the Holder of the “Paper Promissory Note” entitled in the indebtedness has a right to collect payments.

• Lost Note Affidavits based on Electronic Records are Hearsay

• Introduction of fraud into the Securities Market

• Fraudulent creation of assignments in attempt to transfer lien rights from Originator to 3rd or 4th subsequent purchaser bypassing 1st and 2nd purchasers resulting in fraudulent filing in public records.

• Many more.

Page 23 of 37 8/16/10

LoanOriginator

CustodianInvestment Trust

Certificates

SubServicer

SpecialServicer

Law Firm

Investor

MiscFees

LegalFees

Borrower

UnlawfulElectronic

Negotiation DisbursementFees

Step X

ScanCopy

DestroyVault

Non-Perfected Lien

UnlawfulElectronic

Negotiation

DepositorInvestment Trust

SellerInvestment Trust

MERSNominee/Beneficiary

PublicRecords

MERSRegistry

Custodian

InvestmentCreation Fee

UnderBanks

ControlUnlawfulElectronic

Conversion

ToLawFirm

TrusteeInvestment Trust

MasterServicer

UnlawfulElectronic

Negotiation

TrusteeInvestment Trust

Copyright 2010 j.mcguire P O Box 1352, Bedford, Texas 76095-1352 Page 24 of 37 8/16/10

© Copyrighted 2010 j.mcguire P O Box 1352, Bedford, Texas, 76095-1352

Security InstrumentDeed of Trust-Mortgage-Security Deed

Promissory NoteIndebtedness

Security Instrument

Electronic Note

Warranty DeedTitle To Property

Electronic

Paper




Step x

ScanCopy

Paper DocumentsVaulted withCustodian or

Destroyed

Electronic

Paper

Seller/SecuritizerInvestment Vehicle

Special Purpose VehicleInvestment Trust



Security Instrument

Electronic Note

DepositorInvestment Vehicle




Security Instrument

Electronic Note

MERS RegistryTracks Alleged

OwnershipElectronic Data

Notice of Assignment of Lien Rights Filed Public Records for Perfection

Reflects Negotiation of the Paper Note

TrusteeInvestment Vehicle




Security Instrument

Electronic Note

Custodian (Certificateholders)Investment Vehicle




Security Instrument

Electronic Note UnlawfulElectronic

Negotiation

Law Firm

HouseNon-Perfected

Lien

HousePerfected Lien

REOProperty

TheftOf HouseBy Bank

UnlawfulElectronic

Negotiation

UnlawfulElectronic

Negotiation

UnlawfulElectronic

NegotiationPaper

PaperDocumentsRetrieved

FromOriginal

CustodianTransferred to Law Firm

Paper

Paper

Paper

Page 25 of 37 8/16/10

Fannie Mae/Freddie Mac

© Copyrighted 2010 j.mcguire P O Box 1352, Bedford, Texas, 76095-1352



Security Instrument

Electronic Note


Electronic

Paper




Step x

ScanCopy

Paper DocumentsVaulted withCustodian or

Destroyed

Electronic

Paper

3rd Party PurchaserBank

Warehouse LenderSecurity InstrumentDeed of Trust-Mortgage-Security Deed


Security Instrument

Electronic Note

Fannie MaeFreddie MacSecurity Instrument

Deed of Trust-Mortgage-Security Deed


Security Instrument

Electronic Note

MERS RegistryTracks Alleged

OwnershipElectronic Data

Notice of Assignment of Lien Rights Filed Public Records for Perfection

Reflects Negotiation of the Paper Note

Mortgage Backed SecurityPrincipal Only SplitInterest Only Split

(Non-Tranche Splits) Security Instrument



Security Instrument

Electronic Note

Custodian (Certificateholders)Mortgage Backed SecuritiesSecurity Instrument



Security Instrument

Electronic Note UnlawfulElectronic

Negotiation

Law Firm

HouseNon-Perfected

Lien

HousePerfected Lien

REOProperty

TheftOf HouseBy Bank

UnlawfulElectronic

Negotiation

UnlawfulElectronic

Negotiation

UnlawfulElectronic

NegotiationPaper

PaperDocumentsRetrieved

FromOriginal

CustodianTransferred to Law Firm

Paper

Paper

Paper

Loan Originator

Page 26 of 37 8/16/10

(Lop Sided)

Promissory NoteSecurity Instrument

© 2010 j.mcguire

Loan Originator Creates E-NOTE

Alleged DefaultLaw Firm

Vault-DestroyPaper Note

PaperCustodian

MERSRegistry

Assignment E-NOTESeller/Securitizer - Investment Vehicle

MERS – RegistryBeneficial Ownership Electronic Update

BeneficialOwnershipAssigned

Public RecordsPerfection (MERS)

In Lieu

Assignment E-NOTEDepositor - Investment Vehicle


BeneficialOwnershipUpdated

LENDERHolder in Due Course

Bifurcation


Assignment E-NOTETrustee - Investment Vehicle


Assignment E-NOTECustodian - Investment Vehicle

Benefit Certficateholders




Paper Documents RetrievedLacks Proper IndorsementsContinuous Lien Perfection

Public RecordsHIDC Equitable Action on Note

Security Instrument - Nullity(Money Judgment – No Power of Sale Clause)

Courts

Lie, Lie & LieTo WIN!!!

Paper Never MovesNo Bailee’s Letters

Page 27 of 37 8/16/10

“Buyer in ordinary course of business” Uniform Commercial Code

The author’s favorite: "Buyer in ordinary course of business" means a person that buys goods in good faith,..” Better polish your boots on this one. The banks are not the purchaser; the newly created Investment Trust Vehicle was the purchaser. The banks only operate as underwriters, trustees and servicers of these newly created Investment Trust Vehicles.

PART 1. GENERAL PROVISIONS

§ 1102. Scope of Article

This article applies to a transaction to the extent that it is governed by another article of [the Uniform Commercial Code].

§ 1108. Relation to Electronic Signatures in Global and National Commerce Act

This article modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., except that nothing in this article modifies, limits, or supersedes Section 7001(c) of that Act or authorizes electronic delivery of any of the notices described in Section 7003(b) of that Act.

ESIGN ACT: TITLE 15 > CHAPTER 96 > SUBCHAPTER I > § 7003 Specific exceptions1 (a) Excepted requirements The provisions of section 7001 of this title shall not apply to a contract or other record to the extent it is governed by— (1) a statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts; (2) a State statute, regulation, or other rule of law governing adoption, divorce, or other matters of family law; or (3) the Uniform Commercial Code, as in effect in any State, other than sections 1–107 and 1–206 and Articles 2 and 2A.

PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION

§ 1‐201. General Definitions.

(a) Unless the context otherwise requires, words or phrases defined in this section, or in the additional definitions contained in other articles of [the Uniform Commercial Code] that apply to particular articles or parts thereof, have the meanings stated.

(b) Subject to definitions contained in other articles of [the Uniform Commercial Code] that apply to particular articles or parts thereof:

(9) "Buyer in ordinary course of business" means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A 1 http://www.law.cornell.edu/uscode/15/7003.html

Page 28 of 37 8/16/10

person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Article 2 may be a buyer in ordinary course of business. "Buyer in ordinary course of business" does not include a person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

Again, the author’s favorite, "Buyer in ordinary course of business" means a person that buys goods in good faith,..” Better polish your boots on this one. The banks are not the purchaser; the newly created Investment Trust Vehicle was the purchaser. The banks only operate as underwriters, trustees and servicers of these newly created Investment Trust Vehicles. (21) "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. What is needed to be understood is that the original “Wet Ink” negotiable instrument is not the instrument that was negotiated/assigned/transferred to the newly created Investment Vehicle. The creators of the Investment Trust Vehicle assigned/transferred an electronic negotiable instrument, which lacks supporting laws to exist. This electronic negotiable instrument was created by scanning the original “Wet Ink” negotiable instrument, and this electronic digitized copy was to be called the “authoritative copy” of the “transferable record.” It is this “authoritative copy” that was electronically assigned/transferred in book entry form. In actuality, the registry that identifies the “authoritative copy” was updated to reflect who had beneficial ownership rights of the “authoritative copy”. Since there was no negotiation of the original “Wet Ink” negotiable instrument to the newly created Investment Trust Vehicle, the Investment Trust Vehicle never became the holder or holder in due course of the original “Wet Ink” negotiable instrument. Of particular note: if the original “Wet Ink” negotiable instrument by chance was not destroyed, then a high probability exists that the original lender vaulted the documents and the same registry, (MERS), that identified the ownership of the “authoritative copy” will also identify the custodian holding the original “Wet Ink” and the identity of the entity that has beneficial ownership rights of the documents being held by this custodian.

PART 3. ENFORCEMENT OF INSTRUMENTS

§ 3‐301. PERSON ENTITLED TO ENFORCE INSTRUMENT.

"Person entitled to enforce" an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3‐309 or 3‐418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

As the newly created Investment Trust Vehicle has only ownership right to the “authoritative copy” and beneficial ownership right to the original non-negotiated “Wet Ink” negotiable instrument they have not met the definition of “Holder”.

Page 29 of 37 8/16/10

§ 3‐302. HOLDER IN DUE COURSE.

(a) Subject to subsection (c) and Section 3‐106(d), "holder in due course" means the holder of an instrument if:

(1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and

What the courts do not see is that the electronic negotiable instrument does not bear apparent evidence of forgery or alteration; it just cannot legally exist under current laws.

(2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3‐306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3‐305(a).

In “good faith”… have to re‐polish the boots on this one as there is absolutely no “good faith” where there is an intentional act of not following the written laws .

(b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.

(c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization…

The author was required to redirect attention back to the negotiable instrument; this document does not dwell into the issues of bifurcation of the security instrument from the negotiable instrument or about the perfection/continuous perfection of the security instrument.

Time to polish the boots and glue them on, this dance is going to get deep.

Shinola was immortalized in colloquial English with the phrase, “You don't know shit from Shinola,” which first became widely popular during World War II.2

Maybe one day law enforcement will learn the difference.

2 http://en.wikipedia.org/wiki/Shinola

Page 30 of 37 8/16/10

Loan Originator

Assignor Electronic Note

Real Property

Tangible Custodian

Personal Property

Deed of Trust

Intangible

Electronic Deed of Trust

Electronic Note

Paper Promissory Note

Deed of TrustRegistered

MERS System

MERS as Nominee/Beneficiary Under

Deed of TrustInvalid Perfection

If FiledPublic Records

Step XScan/Copy

Destroy

Deed of Trust

Paper Promissory Note

If Vaulted

MERS RegistryBeneficial Ownership Electronic Note

Ownership Rights to Custodial Documents

Investment Trust VehicleSeller – Assignee of Electronic Note


Personal Property

Intangible


Electronic Note

AssignTransfer

BanksAs

Underwriter Investment TrustTrusteeServicer

Master Servicer

Non UCC Negotiation Tangible Paper NoteMERS Registry Updated

Seller Beneficial Owner Electronic NoteSeller Rights to Custodial Documents

Conversion FromPaper to Electronic

Lacks Supporting LawESIGN & UETA

ExcludesArticles 3 & 9

© Copyrighted j.mcguire P O Box 1352, Bedford, Texas 76095-1352

Charts for “Buyer in Due Course”

Page 31 of 37 8/16/10

MERS Registry UpdatedBeneficial Ownership Electronic Note


Investment Trust VehicleSeller – Assignee of Electronic Note


Personal Property

Intangible


Electronic Note

Non UCC Negotiation Tangible Paper Note

© Copyrighted j.mcguire P O Box 1352, Bedford, Texas 76095-1352

Investment Trust VehicleDepositor – Assignee of Electronic Note


Personal Property

Intangible


Electronic Note

Non UCC Negotiation Tangible Paper Note

Investment Trust VehicleTrustee – Assignee of Electronic Note


Personal Property

Intangible


Electronic Note





Assign/Transfer

Assign/Transfer

Page 32 of 37 8/16/10

©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Revision 1 Page 1

“eFraud” eNotes – eClosing – eMortages – eSign

Perfection and Loss of Perfection (Security Instrument) By J. McGuire

The collection rights given in the Paper Promissory Note, if transferred, assigned, or sold to a Mortgage Backed Security, must be a Negotiable Instrument, must be “in writing” (tangible form) identifying an indebtedness which is governed by the Uniform Commercial Code Article 3: Negotiable Instruments or the states equivalence. This Paper Promissory Note by itself is an “Unsecured” indebtedness. Where the lender requires a Security Instrument to be part of the loan package, this Security Instrument states the property is to be used as collateral for the repayment of the indebtedness noted in the Paper Promissory Note. This Security Instrument contains language that stating that if the indebtedness, the lender, as the secured party, (Holder in Due Course with rights to the Paper Promissory Note), by the authority granted in the Security Instrument, could foreclose and sale the property to satisfy the indebtedness. When the Paper Promissory Note is accompanied by a Security Instrument such indebtedness is considered to be a “Secured” indebtedness. The “Secured” indebtedness will survive through a bankruptcy action, whereas an “Unsecured” indebtedness may or may not survive through a bankruptcy action. One has to wonder how a large corporation can emerge from bankruptcy in a matter of months with a lot of indebtedness gone; he who has a secured loan and he who does not is the answer. Example, GM: how many debts were “Secured” and how many were “Unsecured”? The banks’ loans usually are “Secured” while all others are “Unsecured.” Banks get paid and stockholders and investors get the empty baby bottle. Consider this: the banks generally write all the contracts ‐ as such, the banks will write the contracts to protect themselves while leaving the losses to all others. Under the Uniform Commercial Code Article 9, there is an automatic perfection of lien rights that is created when the Security Instrument attaches to the Paper Promissory Note by the signing of all documents at closing. Of note: this automatic perfection is limited in time and to convert this temporary perfection into a permanent perfection, local laws of jurisdiction must be followed. So it is not uncommon to find the Security Instrument filed in Public Records to convert a temporary perfection of lien rights into a permanent perfection of lien rights. The Security Instrument represents the “lien.” In the days of paper, when the Paper Promissory Note was sold/assigned/transferred/negotiated to a subsequent 3rd party purchaser,

Page 33 of 37 8/16/10

©2010 j.mcguire P O Box 1352, Bedford, Texas, USA 76095‐1352 Revision 1 Page 2

endorsements were noted on the Paper Promissory Note, which under the UCC completed the negotiation; also, a “Notice of Assignment” was filed by the subsequent 3rd party purchaser in Public Records, which notices transfer of lien rights to the subsequent 3rd party purchaser, and, as such, continuous perfection, “Perfected Chain of Title,” was maintained of lien rights in Public Records. Under the UCC, Perfection and Perfection for Priority have different meanings.

§ 9301. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS.1

Except as otherwise provided in Sections 9303 through 9306, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:”

How do you create an eNote from a Paper Promissory Note? Scan it. How do you create an eNote at an eMortgage closing? Sign it electronically. A Negotiable Instrument is governed by the Uniform Commercial Code Article 3 and the states equivalence. The UCC allows the Negotiable Instrument to be only in tangible paper form. The banks have been alleging the eSign Act allows for the existence of an eNote (Transferable Record) as being a negotiable instrument under the UCC. As this eNote Transferable Record is not in paper tangible form, it does not meet the UCC requirements to be a negotiable instrument. In this day of electronics, it is this eNote that is transferred/assigned to a subsequent 3rd party, 4th party, or 5th party, on up to the securities market or Fannie and Freddie. Note: the author did not state that the note was negotiated up to any party. As these transfers/assignments are in electronic form there has been no negotiation of any note, “Paper or Electronic.” In fact, an eNote could never be negotiated under current laws and as such no party other than the originating lender could claim to be “Holder In Due Course.” For the subsequent 4th or 5th party to claim they have a valid Security Instrument to exercise the “Power of Sale Clause” is an absolute falsehood. The legal counsels for the subsequent 4th or 5th parties then attempt to foreclose by filing fraudulent “Notices of Assignment” in Public Records showing “negotiation” of an eNote; eNotes lacks supporting laws. The fraudulent filings upon Public Records are the “Ball & Chain” that is misrepresented to provide the illusion that they have legal authority.

1 http://www.law.cornell.edu/ucc/9/article9.htm#s9‐301

Page 34 of 37 8/16/10

Interest In Real Property

Loan Origination

U.C.C. – Article 9 ‐Secured Transactions;Sales of Accounts and Chattel Paper

Part 1. Short Title, Applicability and Definitions

§ 9-104. Transactions Excluded From ArticleThis Article does not apply

(j) except to the extent that provision is made for fixtures in Section 9-313, to the creation or transfer of an interest in or lien on real estate, including a

lease or rents thereunder - As amended in 1972

[Subpart 2. Applicability of Article] [Table of Contents]§ 9‐109. SCOPE.

(d) [Inapplicability of article.]This article does not apply to:

(11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:(A) liens on real property in Sections 9‐203 and 9‐308;

§ 9‐308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION.(d) [Supporting obligation.]

Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

© Copyright 2005 by The American Law Institute and the National Conference of Commissioners on Uniform State Laws; reproduced, published and distributed with the permission of the Permanent Editorial Board for the Uniform Commercial Code for the limited purposes of study, teaching, and academic research.

Interest InPersonal Property

UCC

Art

icle

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aper

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Perfected Security InstrumentFollows The Paper Negotiated Promissory Note

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Loan Origination













UCC

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Assigned - Perfected Security InstrumentDoes Not Follow The Paper Negotiated Promissory Note

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Loan Origination












Scanned ToElectronic


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Non-Perfected Security InstrumentDoes Not Follow The Electronic Negotiated Promissory Note

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