Estate Finance Notes
This is the more important half of the equation: what happens when the mortgagee transfers its interest in the mortgage?
Negotiable instruments and holder in due course
Last time we talked about an alternative to holder in due course protection: get an estoppel certificate in favor of the assignee. This is the only alternative with a non-negotiable note. The holder in due course doctrine only protects against personal defenses and not real defenses. An estoppel statement is not effective if obtained by fraud, or against “latent” equities, that is, an equity in favor of someone other than the mortgagor. There are limits on the holder in due course doctrine.
was the Peters case where there was a
note and mortgage granted by Peters to
The UCC Article 3 says that transfer of an instrument happens when it is delivered with intent (for a purpose). Transfer vests in the transferee the right to enforce the instrument. The “symbolic writing” doctrine won’t be a problem when the original mortgagee has a “servicing contract”, is otherwise an agent, or when the assignee is estopped to deny the payment. So there are some protections from this problem. The best protection is to make sure the payee is solvent.
(I got distracted.)