OMG Mr. Herring – let us provide you with the USPTO patents that help establish the intent! Yes, Virginia there is a Santa Claus.

Holy smokes! “The derivatives market has since rebounded from the crisis, and financial firms have an estimated $700 trillion derivatives exposure worldwide.”

This certainly deserves an update and Reblog. See the Holden appeal decision HERE. 

Since this case began in 2011 there have been a lot of discoveries regarding securitization and NTMs (non-traditional mortgages). If you research any of the trust Prospectus’ they talk about UCC Article 9 in the foreclosures – because the collateral (loan) has been converted into securities shares and treated like a cooperative. You would think that there is no way an actively trading trust Trustee can foreclose on a trust asset as an Article 3 – unless it buys the asset out of the trust …and the trust documents say in most cases the trustee can’t own the assets.

Isn’t there an argument to be made that the trust documents indicate that the borrowers’ collateral (mortgage loan) would fall under UCC Article 9 and that in most cases no financing statements have been filed and certainly UCC Art. 8:501(d) has not been complied with?  Looks like Financing Statement may also be required:

Here is a 2005 Prospectus example. Search “Article 9”:

“Anti-Deficiency Legislation and Other Limitations on Lenders

Certain states have imposed statutory prohibitions that limit the remedies of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some states, statutes limit the right of the beneficiary or mortgagee to obtain a deficiency judgment against the borrower following foreclosure or sale under a deed of trust. A deficiency judgment is a personal judgment against the former borrower equal in most cases to the difference between the net amount realized upon the public sale of the real property and the amount due to the lender. Other statutes require the beneficiary or mortgagee to exhaust the security afforded under a deed of trust or mortgage by foreclosure in an attempt to satisfy the full debt before bringing a personal action against the borrower. Finally, other statutory provisions limit any deficiency judgment against the former borrower following a judicial sale to the excess of the outstanding debt over the fair market value of the property at the time of the public sale. The purpose of these statutes is generally to prevent a beneficiary or a mortgagee from obtaining a large deficiency judgment against the former borrower as a result of low or no bids at the judicial sale.

In addition to the statutory prohibitions on deficiency judgments, certain Mortgage Loans in the trust fund may, by their terms, prohibit recourse to the borrower in the event proceeds from foreclosure or other liquidation are insufficient to satisfy the debt. These Mortgage Loans may also not require payments of principal and interest until maturity, thereby increasing the likelihood that a deficiency will exist.

Cooperative Loans

Generally, lenders realize on cooperative shares and the accompanying proprietary lease given to secure a Cooperative Loan under Article 9 of the UCC. Some courts have interpreted section 9-504 of the UCC to prohibit a deficiency award unless the creditor establishes that the sale of the collateral (which, in the case of a Cooperative Loan, would be the shares of the Cooperative and the related proprietary lease or occupancy agreement) was conducted in a commercially reasonable manner.”

It would stand to reason since the non-traditional loans were allegedly securitized and certificates issued in lieu of the promissory notes that an active trust would be unable to claim a passive/static promissory note as an UCC Article 3 negotiable instrument. How could it be negotiable when it has other notes (certificates) issued against it?