Bearer Paper, the new Parlor Trick and the Holder in Due Course.

*Disclaimer: The following essay is not to be construed as legal advice, consult an attorney for that stuff.

What is Bearer Paper and why is this relevant to the foreclosure defense of borrowers in distress and on the verge of homelessness?

Bearer Paper is the ingenious method that bankers and their cohort Council have developed to enrich the players involved in the Securitized mortgage game. When is comes to Note Endorsement, it used to be very easy to determine who the real party Holding the Note is at the time of filing a Complaint for Foreclosure. Order Paper was often used when transferring ownership of the Promissory Note, hence the language, “Pay to the order of Cuntrywide Racketeers, without recourse.” stamped on the back of a negotiated instrument. When this endorsement is presented on the back of a Note or in an allonge accompanying it, along with a Mortgage or Deed of Trust, which is the mechanism by which a Loan is secured by real estate.

Bearer Paper is indorsed like this, “Payable to the order of ” That’s it. There is no party receiving this instrument, in Due Course. What does Due Course mean? The Holder in Due Course means that a party who follows the UCC Sec. 3 will have Affirmative Defenses as a NEW CREDITOR not responsible for any misrepresentation or deceit in the origination to the Borrower. there must be a party accepting this negotiable instrument For Value, they paid for it, in Good Faith, which means the Note has not been “dishonored”.

The Jury is out, on whether a party must be Holder in Due Course, to assert its right as a Holder in a foreclosure complaint, but it goes without saying, being a Holder in Due Course, is where the Foreclosing Party wants to be, as it brings with it many affirmative defenses against a wronged homeowner.

No matter from what side of the argument you may lie, it is evident that endorsing a Note in Blank, is the easiest way to enforce a Note that may have been passed around “like a whiskey bottle at a frat party”. Endorsing the Note in Blank, allows anyone who brings forth a Complaint of Foreclosure to purport they are the Real Party in Interest.

The more I study the UCC, the more it appears that the Bearer Paper tactic is just a clever parlor trick, another slight of hand convoluting the original intent of the UCC law. It is clear that a Blank Endorsement was meant only for cashier’s checks endorsed by writing the name only of the drawer, to make it easier for the draft to pass through the elaborate bank clearing houses.

It is not ethical, for a Promissory Note, attached to a Mortgage Deed of Trust, to be endorsed in Blank and scanned into an “Electronic Registry Systems” for anyone with a title to “servicing rights” and a membership code, to pass themselves off as a Holder in Due Course or a Holder of Bearer Paper. It is not morally not ethically nor lawfully sound jurisprudence, it is a blatant disregard for the Court’s Civil Procedure. A charade, a trick, a game of poker, where the gambling pro is allowed to bluff with a photocopy of the Ace up his sleeve.

“PROVE THE DEBT” defense tactics

*Disclaimer: This article is for entertainment, it is not intended to be legal advice, consult an attorney.

Instead of using the popular “Produce the Note” defense, homeowners should be championing a “Prove the Debt” defense. The Note is just one part of enforcement of a mortgage security instrument. Many attorneys for Pretender Lenders will try to claim to possess the Note endorsed in blank and then Claim to Hold Bearer paper. Bearer paper can be properly held by “possession alone” and if not challenged, a Judge will likely allow such a claim. However, there are many factors to challenge: 1. How did it come to the possession of Plaintiff? Ask for notaries and certifications. 2. ALWAYS DEMAND A POWER OF ATTORNEY. Nothing is REAL without a Power of Attorney. 3. Assignments and a chain of title are a right under Due Process. If there is a flaw in the Chain of Title then there is a MAJOR PROBLEM as seen in recent Mass. cases. DO NOT ACCEPT ASSIGNMENTS for face value. There is common language on the face of most “Mortgage Assignments” that claim NO Representation. ANY MORTGAGE ASSIGNMENT WITHOUT A POWER OF ATTORNEY IS A NULLITY. (Tawil v. Finkelstein Bruckman Wohl & Rothman, 223AD2d, 52,53 [1d Dept 1996] See also Judge Shack of NY 4. Challenge ALL Agents and their authority. No endorsement that is in Blank and without certification or notary witness and POA should be acceptable. 5. Do not allow the Plaintiff’s Counsel to REPRESENT the Plaintiff without a Power of Attorney. Until this is established, they are just an average Joe off the street. Treat them as such. A Promissory Note cannot be passed around “like a whiskey bottle at a Frat party” even indorsed in Blank, without proper consideration paid, and proof that a Mortgage assumption and debt was transfered.

We all know that over 90% of mortgages were securitized and the Notes are all likely in possession of a Document Custodian and NOT IN THE POSSESSION of the Plaintiff Pretender Lender Attorney. Yet, they will lie to the Court and provide “true copies” to the Court and purport they are good as gold. OBJECTION!

A copy is a copy, and without all proper evidence, NOT HEARSAY, but actual evidence from a competent fact witness, these documents are not valid PROOF that you have defaulted, that the Plaintiff is the Real Party in Interest, Fact: at least one another entity has title to your Mortgage and/or Note, unless your mortgage was originated by a local bank.

However, if you come in day 1(or show up on your Court date without previous submitted pleadings) and try to explain this complicated banking scheme to a veteran Judge…he will simply dismiss it. BUT if you carefully craft your pleadings and request very strong discovery in the form of Interogatories and Admissions and ask for Job history affidavits……THE PRETENDER WILL IGNORE these requests. This is their admission to the Court by their own acquiescence to the FACTS, that they are presenting a Fraud on the Court. Give the Pretender enough rope to hang themselves. There is No Silver bullet ….but there is a lot of rope.