Thursday, February 09, 2012

"Show Me the Note" is Now the Law

A lot of foreclosure defense has been riding on the "show me the note" argument, namely, "Hey bank, where's the promissory note you claim is evidence of the debt?"  The state courts and the federal district courts have been quite loose on this and generally allowed the banks to proceed with little more than a shoeshine and a smile, but the bankruptcy courts have tended to be stricter.  The reason is inherent in the nature of bankruptcy: Note issues come up normally in two situations, claims and motions for relief from stay, and in both the claimant (the bank) has a stricter burden of proof than in nonbankruptcy proceedings.  Now that fact has been writ large courtesy the Tenth Circuit Court of Appeals in In re Miller.  The Tenth Circuit, reversing the bankruptcy court and the Bankruptcy Appellate Panel, holds essentially that, if you want to come to the table as a note holder, you'd better be holding the note.


This approach is perfectly reasonable and long overdue.  There is an issue that remains open, though.  The Tenth Circuit, as with every other court I've seen address the issue, relies on UCC Article 3 to determine if the claimant is in fact the holder of the note.  There is a growing debate, though, concerning whether standard mortgage notes qualify as negotiable instruments under Article 3.  If they do not, then Article 3 does not apply, and we must look to other law to determine who holds the note.  Stay tuned, we may have this all sorted out in 10 or 12 years.

Labels: , , , ,

6 Comments:

At February 10, 2012 at 1:27 AM, Anonymous Mortgage Buyers said...

Hello Everyone,
This is an interesting concept about Show Me the Note" is Now the Law. companies can produce documents to prove standing to foreclose, some foreclosures may simply be delayed, legal experts say. But it's not clear that the issues are minor, said the Congressional Oversight Panel in a report last month.Thanks a lot...

 
At June 13, 2012 at 4:31 AM, Blogger davelindhl said...

its may be nice blog!!!.we have news about real estate investing information.nice thoughts for your good work....visit:dave lindahl

 
At June 25, 2012 at 6:33 AM, Blogger davelindahl said...

its may be nice blog...we have news about real estate investing...nice thoughts for your good work....
dave lindahl

 
At July 4, 2012 at 6:28 AM, Blogger davelindahl said...

this will be very useful blog to us....i like your blog very much...it will be very interested and you should keep update daily..
we have news about real estate investing....
dave lindahl

 
At March 29, 2013 at 8:44 PM, Anonymous Anonymous said...

This comment has been removed by a blog administrator.

 
At March 30, 2013 at 8:24 AM, Anonymous Anonymous said...

This comment has been removed by a blog administrator.

 

Post a Comment

<< Home