Editor’s Note: This case is important because the court is no longer making presumptions that all elements of “holder with rights to enforce” are present. It 180 degrees opposite to the “discretionary” rulings by trial courts that the loan and the transfers of the loan must be valid — why else would the forecloser be i court. In discovery the homeowner has been restricted because of these presumptions — thus barring the homeowner from demanding proof that is in the sole care, custody and control of the Defendants. Or it is not i their control, which is what this case says and what is true in nearly all other cases in which there is a foreclosure based upon defective loan origination documents that are subject to false claims of securitization.
The following are excerpts from the case decision:
According to the UCC, a negotiable instrument may be enforced by “the holder of the instrument.” Ind. Code § 26-1-3.1-301(1). The term “holder” means “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person if the identified person is in possession of the instrument[.]” I.C. § 26-1-1- 201(20). In this context, “bearer” means the person in possession of a negotiable instrument “payable to bearer or endorsed in blank.” I.C. § 26-1-1-201(5).
Wells Fargo claimed it controlled the Note and was entitled to enforce it pursuant to 15 U.S.C. § 7021, which provides:
For purposes of this section:
(1) Transferable record
The term “transferable record” means an electronic record that—
(A) would be a note under Article 3 of the Uniform Commercial Code if the electronic record were in writing;
(B) the issuer of the electronic record expressly has agreed is a transferable record; and
(C) relates to a loan secured by real property.
A transferable record may be executed using an electronic signature.
A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.
A system satisfies subsection (b) of this section, and a person is deemed to have control of a transferable record, if the transferable record is created, stored, and assigned in such a manner that—
(1) a single authoritative copy of the transferable record exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;
(2) the authoritative copy identifies the person asserting control as—
(A) the person to which the transferable record was issued; or
(B) if the authoritative copy indicates that the transferable record has been transferred, the person to which the transferable record was most recently transferred;
(3) the authoritative copy is communicated to and maintained by the person asserting control or its designated custodian;
(4) copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control;
(5) 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
(6) any revision of the authoritative copy is readily identifiable as authorized or unauthorized.
(d) Status as holder
Except as otherwise agreed, a person having control of a transferable record is the holder, as defined in section 1- 201(20) of the Uniform Commercial Code, of the transferable record and has the same rights and defenses as a holder of an equivalent record or writing under the Uniform Commercial Code, including, if the applicable statutory requirements under section 3-302(a), 9-308, or revised section 9-330 of the Uniform Commercial Code are satisfied, the rights and defenses of a holder in due course or a purchaser, respectively. Delivery, possession, and endorsement are not required to obtain or exercise any of the rights under this subsection.
(e) Obligor rights
Except as otherwise agreed, an obligor under a transferable record has the same rights and defenses as an equivalent obligor under equivalent records or writings under the Uniform Commercial Code.
(f) Proof of control
If requested by a person against which enforcement is sought, the person seeking to enforce the transferable record shall provide reasonable proof that the person is in control of the transferable record. Proof may include access to the authoritative copy of the transferable record and related business records sufficient to review the terms of the transferable record and to establish the identity of the person having control of the transferable record.
(g) UCC references
For purposes of this subsection, all references to the Uniform Commercial Code are to the Uniform Commercial Code as in effect in the jurisdiction the law of which governs the transferable record.
Given the lack of evidence regarding a transfer or assignment from Synergy to
Wells Fargo or Fannie Mae, Mouzon’s conclusory testimony was not sufficient to establish that it controlled the Note as defined in §7021. Thus, Mouzon’s trial testimony did not establish that Wells Fargo is entitled to enforce the note as the holder, and is not a basis for affirming the judgment of foreclosure.
Wells Fargo has not shown that it controls the Note for purposes of §7021(b) and, accordingly, has not established its status as holder for purposes of the UCC. Because Wells Fargo has not established that it was entitled to enforce the Note as its holder, the trial court’s grant of summary judgment was improper and the resulting judgment must be set aside. We reverse and remand.
Reversed and remanded. BRADFORD, J., and BROWN, J., concur.
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