Not your everyday "collateral file"
Bringing light to the world? Opening eyes which cannot see? This has been previously explained in depth in other fashions. This explanation is also supported with previous charts and articles along with sources which support them. It is very important to understand the difference between an [intangible] Authoritative Copy and a [tangible] [paper]Promissory Note. One is electronic, One is paper. Simple?
Ever wonder what the "electronic" verbiage in a transferable record looks like?
Facts [Good v. WELLS FARGO BANK, NA, 18 NE 3d 618 - Ind: Court of Appeals 2014]
On March 14, 2008, Good purchased real estate in Elkhart. Good executed an electronic promissory note ("the Note") in favor of Synergy Mortgage Group, Inc., ("Synergy"). The Note included the following term: 11. ISSUANCE OF TRANSFERABLE RECORD; IDENTIFICATION OF NOTE HOLDER; CONVERSION FROM ELECTRONIC NOTE TO PAPER-BASED NOTE[]
* * * * *
(B) Except as indicated in Sections 11(D) and (E) below, the identity of the Note Holder and any person to whom this Electronic Note is later transferred will be recorded in a registry maintained by MERS CORP, Inc., a Delaware corporation or in another registry to which the records are later transferred (the "Note Holder Registry"). The authoritative copy of this Electronic Note will be the copy identified by the Note Holder after loan closing but prior to registration in the Note Holder Registry. If this Electronic Note has been registered in the Note Holder Registry, then the authoritative copy will be the copy identified by the Note Holder of record in the Note Holder Registry or the Loan Servicer (as defined in the Security Instrument) acting at the direction of the Note Holder, as the authoritative copy. The current identity of the Note Holder and the location of the authoritative copy, as reflected in the Note Holder Registry, will be available from the Note Holder or Loan Servicer, as applicable. The only copy of this Electric Note that is the authoritative copy is the copy that is within the control of the person identified as the Note Holder in the Note Holder Registry (or that person's designee). No other copy of this Electronic Note may be the authoritative copy....
If you search, you may find a few cases referring to transferable records, but that does not mean more will not follow. When the world figures this out, I suppose it won't matter then, will it?
Negotiable instruments go way, way back. Look at the history of it to know more if you want. The point is, then just as now, these were and are tangible, which means it is something that was or is written upon, whether paper, lambskin, etc.
A promissory note is a document, signed by the person making the document, containing an unconditional promise to pay a fixed sum of money to a named person, to the order of a named person, or to the bearer (the person who is in physical possession) of the document. Loans are typically formalized in promissory notes, and since they often provide for payments over time, they function to provide credit to the borrower who is the maker of the note.
A letter of credit is a document provided by a bank or other financial institution as a guarantee that a specific sum of money will be paid once stated conditions have been met. Letters of credit are often used in the import and export business to ensure that payment will be received. Because of factors such as distance, different laws in each country and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade. (Note: Relative also to [warehouse lender / originating lender] electronic [eMortgage][ personal property] [payment intangible] mortgage loans)
Key legal concepts in negotiable instruments law — nemo dat and holder in due course
The nemo dat rule is an important general principle of law that states that only holders of good title (legal owners) can transfer ownership. However, this rule does not apply to negotiable instruments. This is to facilitate the free transferability of negotiable instruments, which aids commerce in general. Because negotiable instruments can be payable to the order or to the bearer of the instrument, they can be held by someone who is not connected with the underlying transaction and does not know of any potential defect in that transaction. If such a holder holds the instrument in good faith and is not aware of any problems with the instrument, the holder is a bona-fide purchaser for value or holder in due course (HDC). This means that the HDC takes good title to the instrument and can claim payment even if the person from whom he or she received it did not hold title. The HDC acquires greater rights under a negotiable instrument than an ordinary transferee of a contractual right.
IF THE BANKS HAD FOLLOWED THE LAWS
Back in Grand pappy’s day, and according to past case laws opined during the tangible and usually a 1st Lien Holder world of litigation, it was simple enough to “Produce the Note”. It was simple enough to prove a perfect chain of title in public land records, wherever the real property may be located. Every bit of this proof that was provided was due to the Lender, whomever it may have been, followed the laws that governed the [tangible] paper promissory the borrower tangibly indentured [signed] and the laws that governed the real property. It was simple enough and those “laws that govern” are actually still in place today.
When the mortgage bankers ass o citation [mba] conjured up this nightmare, I don’t think they imagined it could be exposed. Leave it t an engineer to get the job done. Nevertheless, this “New Age Delivery” failed as a strategic business model. That is, unless it was designed to implode? Read the MBA’s whitepaper back in 1993 by P. K. Slesinger. This person, along with others did a very good job of pulling the wool over eyes that could not see. Is it wool-pulling or is it the blind leading the blind? No matter which one is determined, it was deception to the nth degree.
The first “flag” that was thrown in the whitepaper was;
“But in the not too distant future, paper mortgage assignments may become as common as dinosaurs--outside Jurassic Park.”
Boy was she ever so right about that statement. Between the MBA, its cronies and Mutilated Every Recordation System members, it is pretty safe to say she got that one right.
The impression that was given to the many in the past about this “New Age Delivery” system would greatly increase the ability to provide mortgage loans to potential homeowners while at the same time provide a valuable service to investors. It could have worked if these purported “Lenders” have followed the laws for governing the [tangible] real property mortgage. But, they did not.
The whitepaper claimed in 1993 that Freddie Mac was exploring "New Age Delivery" claiming that this exploration allegedly represented a proposal for grounding(?) the mortgage note for the life of the mortgage loan immediately after origination. However, the term “mortgage note” was a vague form of terminology when [electronic records] are involved. Many are now finding this “grounding” was a cause of the short lived life of a tangible secured real property mortgage.
It also claimed that subsequent transfers of the loan, as well as transfers of servicing, would be registered in an electronic clearinghouse which was essentially a computer. It explained that it would be a book-entry system for transfers of mortgages and servicing rights sponsored by participating mortgage investors and claiming not only would Fannie Mae, Freddie Mac and GNMA be participating, but also conduits, portfolio lenders and any other investors of mortgages.
The MBA made this sales pitch really well as this is the beast we have today. Although anyone that can read this intention in just about any electronic mortgage [eMortgage] guidebook, these tricksters covered their tails, because they probably knew that someone would eventually question the validity of these electronic mortgages, so disclaimers that the laws underneath these payment streams must be followed. The problem as it appears is the “underneath” [underlying collateral laws] part was not followed. Only the top UCC [general intangibles] part is what the banks attempt to use to foreclose.
Compare the difference between a paper airplane and a real airplane. It is easy to tell the difference between them. Both are tangible, but one is a combination of metals, glass, etc., but the other is a product of pulp from a tree.
The [intangible] eMortgage and the real property [tangible] mortgage, have similarities [both are mortgages] but the unequal difference seems to be overlooked. The [intangible] eMortgage should most likely governed by the Uniform Commercial Code [UCC], if secured, but the real property [tangible] mortgage is governed by a portion of the UCC, but also laws of local jurisdiction for the real property. It is easy to confound when word crafting is at play.
With that rambling out of the way, you should learn to understand particular terms you thought you knew. Look at the Freddie Mac eMortgage Guide to see differences in “words” you thought you knew, unless you’ve already read the words from the “other” side.
Holder means a Person described in Section 16(d) of UETA and in Title II, Section 201(d) of E-SIGN who has Control of a Transferable Record and who is named as the Controller in the MERS® eRegistry. (Also known as Note Holder, which is a field in the MERS® eRegistry.)
If you understand this term, you realize that “Holder” is a controller of a transferable record. This does not mean the “holder” of a [tangible] paper promissory Note. The confusion probably cause by word crafting “Also known as Note Holder…” can throw one off since the general consensus is that the words “holder” once use to mean a [tangible] Note holder. Hence the trickery.
Hybrid eMortgage means an eMortgage in which the promissory Note is an eNote signed by the Borrower electronically and the Security Instrument is a paper document signed by the Borrower using a handwritten signature.
This should be a dead give-away since way back then, the Courts of old clearly opined “The mortgage follows the Note”. This is also a clear indication of the MBA’s intentions to commit securities fraud. What is more alarming is that fact that a GSE, like the others actually wrote this into its guidelines. How could the [tangible] security instrument attach to an electronic promissory note that has not U.S. law to support it?
MERS® eRegistry means the electronic registry (operated by MERSCORP, Inc.) that serves as the system of record to identify the current Controller and Location Organization of the Authoritative Copy of an eNote.
That is all MERS is. MERS system identifies a Controller of an eNote.
MERS® System means an electronic registry (operated by MERSCORP, Inc.) that tracks changes in loan servicing and beneficial ownership rights. Member companies update the registry via MERS® OnLine (the browser-based interface) or through batch file interfaces.
That is all MERS does. The MERS system tracks changes in loan servicing and beneficial ownership rights of electronic promissory Notes [eNotes]. That is it.
MIN means Mortgage Identification Number, which is the 18-digit number composed of a seven-digit organization ID, 10-digit sequence number, and check digit. The MIN is used to cross-reference eNotes to modifications and addenda.
To make things appears swell, the MIN was placed upon the potential homeowners [tangible] security instrument and [tangible] promissory note. This allowed for an illusion that the MIN registered in MERS was an actual [tangible] borrower’s obligation to secure the payment stream to the investor. It is unfortunate that there is no payment stream or underlying secured indebtedness. Only unsecured.
MISMO® means Mortgage Industry Standards Maintenance Organization, which is the body created by the Mortgage Bankers Association of America (MBA) in October 1999 to develop, promote, and maintain voluntary electronic commerce standards for the mortgage industry.
These may be the ones to blame? There are so many involved.
Modification Agreement means an agreement that amends a Mortgage or eMortgage. If the Note is an eNote that is registered in the MERS® eRegistry, the Servicer, as Delegatee, must initiate a modification flag update in the MERS® eRegistry and register the Modification Agreement. (The eNote and the Modification Agreement are crossreferenced on the MERS® eRegistry).
Every note registered in the MERS eRegistry is an eNote. This provides an illusion to many whom believe a loan modification is a [tangible] loan modification. This loan modification mentioned is for an eNote. Most MERS electronic tracking agreements make it clear that modifications will take place from time to time with the eNote registered in the MERS eRegistry. Tricked you?
Mortgage File Documents means all Mortgage documents from the Mortgage closing (including paper or Electronic Records), other than the original Note or Authoritative Copy of the eNote, any Note or eNote addendums, any ARM conversion instrument, any balloon/reset instrument, any Modification Agreements, Assumption Agreements and any intervening assignments.
This part can confuse anyone. Since the [tangible] documents were scanned and saved into a digital format, these “copies” were attached to the alleged eNotes [eMortgages]. The big problem is what most appear not to see. Conversion. Hence the following term.
Process means a series of actions or steps necessary to perform a particular task or meet a particular requirement. Except where applicable law or the context requires otherwise, a Process may be deployed through electronic means, or involve steps or actions which are non-electronic, or may involve a combination of both electronic and non-electronic means, steps or actions.
5.2.10 Conversion of the eNote to Paper
Neither the Servicer nor any other party may convert an eNote owned by Freddie Mac into a paper-based Note without Freddie Mac’s prior specific and express written consent. In the event Freddie Mac gives its specific and express written consent, the Servicer, after converting an eNote to a paper Note, must update the MERS eRegistry to provide notice of the conversion of an eNote to a paper Note.
Conversion of eNote to Paper? How do you convert anything into something from nothing? (explained later)
Record or Electronic Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
When it comes time to try out the mortgage scheme, the banks henchmen will produce an illusionary tangible medium from the electronic record by simply pressing the “print key”, then claim it to be the “note”. Easy? Yes, Lawful? Doubt it.
Servicing Records System means a Servicer's computer hardware and software system for storing, tracking and managing electronic Mortgage File Documents and other Electronic Records related to servicing eMortgages.
System means a computer system, or any component of such computer system, used to create, register, sign, transfer, store, maintain, retrieve, and/or secure an eNote, Custodial Document or other Mortgage File Document.
System Provider means an entity providing a System, or any component of such System, used to create, register, sign, transfer, store, maintain, retrieve, and/or secure eNotes or other Mortgage File Documents.
Transfer of Control means the transfer of a person’s right, title, and interest in an eNote to another Person within an eNote registry. If the MERS® eRegistry is the designated Note Holder Registry in an eNote, it also means a change in the Controller of the eNote.
By now you are realizing this is not grandma’s recipe for chicken soup is it? These corrupted minds gathered the investment world like a trapper in the wild using the purported potential homeowners [tangible] underlying collateral as the bait.
THE MEAT AND POTATOES
For me, it appears that the lack of understanding for the layman resides with the intangible side of this fiasco. This was intentional. Neither you nor the “persons” they sold this idea to, actually understood it. Most likely they never even read anything before they approved / enacted laws to support this electronic mess. However, many learned people did provide the arguments back when this [eMortgage] [eNote] far-fetched idea came into view and that this could not lawfully work. But the MBA and its gang ignored this fact because fame and riches were all they were looking for.
For some reason, peoples are led to believe the eNote [general intangible] is the same as the [tangible] [paper] promissory Note. Nothing could be farther from the truth than this belief. Take a look at some of the [eMortgage] words of confusion.
Authoritative Copy (AC): The unique, identifiable and mostly unalterable version of the eNote that (1) identifies the person asserting control as the person to which the Transferable Record was issued or most recently transferred, (2) ensures that “each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy” and (3) any revision of the AC is readily identifiable as authorized or unauthorized.
So, let me guess? When the banks representative [eShill] makes a claim to an alleged “note”, is this AC what they are referring to, and not the [tangible] [paper] promissory note? Hey, after all, it is purportedly not a copy, right?
Transferable Record means an Electronic Record as described in Section 16 of UETA and in Title II, Section 201 of E-SIGN. A Transferable Record is referred to herein as an eNote.
This term does not even reflect UCC 3, but ESIGN and UETA? However, ESIGN does mention something about UCC 3 when attempting to “compare” “similarities” of an eNote and a [tangble] paper UCCS note.
UCC means the Uniform Commercial Code, which is a model commercial transactions statute promulgated by NCCUSL and which has been published and distributed by members of NCCUSL to the states, territories and possessions of the United States for enactment. UCC Article 3 governs negotiable instruments, including paper notes.
Slickery trickery; “UCC Article 3 governs negotiable instruments, including paper notes”. This statement is correct, but it can mislead a person to believe the eNote scam, as the banks intentions were to lead most to believe the eNote is the equivalent for the [tangible] paper note. It is not the same.
UETA means the Uniform Electronic Transactions Act of 1999, which is a model act promulgated by NCCUSL and which has been published and distributed by members of NCCUSL to the states, and territories and possessions of the United States for enactment. UETA and E-SIGN govern eNotes.
Read it an weep Mr. Banker. Shame on those whom enacted this and other electronic scheme laws before ever reading or evaluating the legality of them.
DEFENDING THE ENOTE?
It is apparent that this eMortgage [eNote] stuff is only being read by a few because this would be in the headlines. Or would it?
I know this is a very confusing issue for the world because nobody across the globe [global investors] [or others] realize that for this eMortgage scheme to work, and according to the GSE’s manuals/requirements, it would be accomplished solely by electronic means, other than what would be required for the [tangible] documents requiring a physical closing agent and notary. Speaking of? So where did all the electronic signatures come from? I am speaking of the millions of [tangible] paper promissory notes. The [tangible] paper promissory Note was [tangibly] indentured by a physical person and a mechanical device called a pen, hopefully filled with blue ink.
3.3.7 Presence at Signing [Freddie Mac eMortgage Guide]
Each Borrower must be physically in the presence of the closing agent and/or a notary public coordinating the signing of the eNote and other Electronic Records; however, all Borrowers do not have to be in each other's presence at the time of signing.
Did you electronically sign? Did know you “electronically signed”? You didn’t! This confusion is actually meant for the “Account Debtor”. This is the same with all electronic [intangible goods] mortgages.
3.3.3 Identify the Electronic Record to Be Signed
The eClosing System must be designed so that the eNote and other Electronic Records to be signed by the Borrower are clearly identified for the Borrower and are individually presented to the Borrower for review and electronic signing. For each Electronic Record that is required to be signed, the Borrower must take an action that expresses the Borrower’s intent to sign the Electronic Record being presented. A single Electronic Signature cannot be applied to multiple Electronic Records.
3.3.4 Establish the Borrower’s Intent to Use an Electronic Signature
Seller/Servicer must assure that the Borrower is aware of the legal consequences of the use of an Electronic Signature. The System and/or Process used for electronically signing eNotes and other Electronic Records with Electronic Signatures must:
• Provide the Borrower with notice of the effect the Electronic Signature will have;
• Provide a mechanism or process for the Borrower to confirm that the Borrower intends to electronically sign the Electronic Record(s) presented;
• Provide the Borrower with notice that an Electronic Signature will be attached to, or logically associated with, an eNote and other Electronic Records, as applicable; and
• Capture the Borrower’s acknowledgment that his or her Electronic Signature has been attached to, or logically associated with, the eNote or other Electronic Records, as applicable.
How does a [tangible] paper promissory note become an [intangible] electronic promissory note? Scan and save.
 Whomever could prove they were a secured creditor by providing a perfected security instrument. Could be a 2nd, 3rd, if lawfully proven.
 Carpenter v. Longan; U.S. Sup Ct.; West v. First Baptist Church of Taft; Tex. Sup. Ct.