ARTICLE: Symposium Journal- Four More Years? Business Law and the Great Recession: Mortgage Foreclosures, Promissory Notes, and the Uniform Commercial Code Skip over navigation
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Copyright (c) 2012 by the Western State University Law Review Association, Inc.
Western State University Law Review

ARTICLE: Symposium Journal- Four More Years? Business Law and the Great Recession: Mortgage Foreclosures, Promissory Notes, and the Uniform Commercial Code

Spring, 2012

Western State University Law Review

39 W. St. U. L. Rev. 313

Author

By Douglas J. Whaley*

Excerpt



Introduction
 
As is true of many things in life the Uniform Commercial Code's statutes concerning the role of promissory notes in a mortgage foreclosure are both simple and at the same time complicated. The purpose of this article is to draw out the matter in detail, but let's begin with the simple (and basic) rule first. Indeed let's call the Golden Rule of Mortgage Foreclosure: the Uniform Commercial Code forbids foreclosure of the mortgage unless the creditor possesses the properly-negotiated original promissory note. If this can't be done the foreclosure must stop.

Of course there are exceptions and situations in which problems with the note can be addressed and cleared up, and those will be explored as we progress. The difficulty is that all too often the Golden Rule of Mortgage Foreclosure is simply ignored and the foreclosure goes ahead as if the rule were not the statutory law of every jurisdiction in the United States. 1

Why is that? The answer is almost too sad to explain. The problem is that the Uniform Commercial Code is generally unpopular in general, and particularly when it comes to the law of negotiable instruments (checks and promissory notes) contained in Article Three of the Code. Most lawyers were not trained in this law when in law school (The course on the subject, whether called "Commercial Paper" or "Payment Law," is frequently dubbed a "real snoozer" and skipped in favor or more exotic subjects), and so the only exposure to ...
 
 
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