I was having a conversation with one of my team into the wee hours last night about these supposed Notes that are filed with courts around the country, claiming to be certified copies and signed off on with some anonymous initials. This is what judges rely on when they grant foreclosure on someone’s home.
How do they get away with it?
Because no one is thinking about the Negotiable Instruments section of the Uniform Commercial Code!
Section 3-501 et seq clearly talks about this. Every state has it in its codes under UCC.
Scenario #1:
You are in a deed of trust state (non-judicial). In order to stop the sale of your home, you have to file a lawsuit. Once you are “noticed”, usually by certified mail and then in the real property records with a Notice of Default and Election to Sell, you have so much time to respond.
This is where the QWR comes in. This is also where the DVL comes in. Pre-litigation discovery!
No servicer (who the two foregoing letters go to) will let you see the original note because they don’t have it. If the loan was securitized, the note and deed of trust were shredded when they were uploaded into the MERS System®, so the best you’ll get is a “copy” of the Note you signed.
So you’re preparing a draft of a lawsuit, asking for an injunction to stay the sale, eh? You’ll have to have some sort of discovery in the works, but wait! Doing this in court is time-consuming and expensive, which is why I like QWR’s and DVL’s. You send them to the servicer’s QWR address (specifically) … don’t send them to the servicer’s regular address (they have an address specifically for QWR’s) unless you want your requests to be ignored. It’s like getting the evidence in advance without discovery.
Scenario #2:
You are in a mortgage state (judicial). You’ve already received a Notice of Intent to Accelerate the Note.
This gives you “x” number of days to respond, because the mortgage loan servicer that is behind the scenes “doing the dirty” has retained the law firm to prosecute the foreclosure. While the QWR and DVL is a great way to slow down the progress of opposing counsel, you need to pay attention to the local court docket.
Once you’ve been served with Notice about being sued, understand that state and local court rules apply. You have “x” number of days in which to respond. Check the land records for the filing of the Notice of Lis Pendens because that’s the document that most attorneys claim just slandered title.
Normally, you check the copy of the summons and complaint to foreclose for the most damning information. You discover the Note attached with a stamp on it that says, “Certified Copy of” or something similar, signed off on with some title company executive’s initials. The first mistake is to ignore it.
The Copy and the UCC
To put it in simple terms … take a check, make it payable to yourself … now make a photocopy of that check (both sides), so the check looks as if it’s been copied (this is what the servicers do). Then take the copy of your check to your local bank and tell the teller you need to cash the check. What do you think the teller would say?
“Sorry, I can’t cash a copy of the check, I have to have the original.” Duh. She might even hit the silent alarm and you’ll be in leg irons in short order for attempting to forge a check. Copies don’t work. That’s part of a UCC term called “presentment”. You either have the original or you don’t. Why don’t attorneys simply explain to a judge this very scenario about taking a copy of a check to a bank and trying to endorse the copy and present it to a teller to cash and then wonder why the cops were called. Hello?
Just a thought.
Don’t you just love the days of technology gone by? The servicers are also very good at creating notes out of thin air too. If you suspect this is happening, you’ll have to cough up the funds to pay a forensic note examiner to look at your note and testify that it is a forgery.
Endorsements
This is another subject that fools a lot of people. Many times, the servicer will come into court through their attorneys and attempt to demonstrate the note has an indorsement-in-blank on it, which turns it into “bearer paper”, meaning that anyone who has the original with this on it can cash it. Did you get that?
You can’t cash copies … no matter what! Endorsements can be forged. Rubber stamps can be ordered to spec. Research into the stamps becomes necessary. Research into WHO put the stamps on the note is also necessary.
THIS CASE COULD NOT HAVE COME AT A BETTER TIME … LIKE NOW!
This is why I put out the Advanced COTA Workshop Kit on the Clouded Titles website. It’s full of research and litigation strategies!
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