In a recent letter by the Illinois Bankers Associations (IBA) to its state supreme court, the association makes it clear that it understands the issue asserted by lawyers such as myself “that many if not most mortgage notes which conform to the fixed requirements of Fannie Mae and Freddie Mac are not negotiable instruments because they contain undertakings and conditions that disqualify them from the definition of “negotiable” in Article 3 of the Uniform Commercial Code. Similar arguments are being made with reference to mortgages recorded under the Mortgage Electronic Registration Systems (MERS), which eliminated certain traditional paperwork when assigning notes and mortgages. According to these arguments, when plaintiffs are holding such notes (and/or when MERS is the mortgagee of record, depending on the state), these parties are precluded as a matter of law from asserting that they are holders in due course of the note (or that they have a beneficial interest in the mortgage). And, the arguments go, when a party cannot provide documentary evidence of a chain of title leading from the originating lender to that party (and likewise as to a transfer of the beneficial interest in the mortgage to that party, if applicable) – which parties frequently cannot do given the liquid nature of how assignments are made in the secondary market – the foreclosure lawsuit must be dismissed as a matter of law.”
The letter goes on to underscore how critical this is as “Fannie Mae and Freddie Mac together hold over $5.3 trillion in home mortgages, nearly half the entire residential mortgage market in the United States. Viewed on a prospective basis, Fannie and Freddie presently are issuing more than 95% of all mortgage-backed securities in the country.”
It’s the old argument of the ends justify the means. The banks ultimately believe they should be able to foreclose without having to properly prove their entitlement to take your house! Which goes back to one of my earlier blogs “Foreclosure Defense… It’s About Justice.”
To read the entire IBA letter, click here.
If you or anyone you know is facing foreclosure, struggling with debt, or contemplating a real estate transaction, please call or e-mail us today for a consultation. Let the lawyers and staff at the Law Offices of Evan M. Rosen, P.A. serve you!