Monday, May 14, 2012

The Security Instrument

The most common statement heard!
“The collateral follows the note.”
"The collateral follows the obligation. See UCC Section 9-308(d).”
This is correct... section 9-308(d) does state a security instrument follows the note.

(d) [Supporting obligation.]
Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for
the collateral.

what is missed is this:

§ 9-104. Transactions Excluded From Article
This Article does not apply
• (j) except to the extent that provision is made for fixtures in Section 9-313,
to the creation or transfer of an interest in or lien on real estate, including a
lease or rents thereunder; 
As amended in 1972

In OTHER WORDS... when it comes to perfecting the note, it doesn't follow that it perfects the deed/security instrument. So, even though your bank can prove the note legitimate, that doesn't also immediately perfect the mortgage. As we have seen in most cases of mortgages securitized in trust funds, there are many questionable practices to include robo-signing, fake notary signatures, back dating, re-creation or actual fabrication of lost documents, just to mention a few.
So, don't be scared if your bank does happen to find the original note and proves it legitimacy. All it proves is that they have possession of the note you signed. Doesn't mean it legitimizes the mortgage deed nor that they have the right to foreclose! DO YOUR HOMEWORK folks. There is absolutely NOTHING more pressing for your time and investigation than to properly defend your ownership of your home!


J. McGuire P O Box 1352, Bedford, Texas 76095-1352

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