Article 3 of the Uniform Commercial Code and Bankruptcy: A Historical Overview and Modern Trends

Presented by J. Felicia LeRay, RN Esq.

The law of negotiable instruments (also called commercial paper) is an area of

commercial and business law, which sets out the general rules relating to

certain documents of payment. A negotiable instrument is a document, such

as a check or promissory note, which promises the payment of a fixed amount

of money and may be transferred from person to person or entity to entity.

Negotiable instruments have two functions—a payment function and a credit

function.

This area of law started developing in the fourteenth century because

merchants needed a less risky and more convenient alternative to carrying

large amounts of gold or money, as well as ways of obtaining credit. This law

was eventually codified, and since 1882, in England, transactions in negotiable

instruments are governed by the Bills of Exchange Act. In the US, this area of

law is regulated by the Article 3 of the Uniform Commercial Code (the "UCC").

Currently, all 50 states, the District of Columbia, and the U.S. Virgin Islands

have adopted the UCC as state law, although some states have not adopted

every single provision contained within the code. The rules are very similar in

other common-law jurisdictions such as Canada, India, and Pakistan.

The goal of harmonizing state law is important

because of the prevalence of commercial

transactions, which extend beyond one state.

In Georgia, this area of law is governed by

Title 11 Chapter 3, which may be cited by its

short title- the “Uniform Commercial Code --

Negotiable Instruments.”

Article 3 only applies to negotiable

instruments, and it does not apply to money,

to payment orders governed by Article 4A

(transfers of money between banks), or to

securities governed by Article 8.

§ 11-3-104. Negotiable instrument

(a) Except as provided in subsections (c) and (d) of this Code section, "negotiable instrument"

means an unconditional promise or order to pay a fixed amount of money, with or without

interest or other charges described in the promise or order, if it:

(1) Is payable to bearer or to order at the time it is issued or first comes into possession of a

holder;

(2) Is payable on demand or at a definite time; and

(3) Does not state any other undertaking or instruction by the person promising or ordering

payment to do any act in addition to the payment of money, but the promise or order may

contain:

(i) An undertaking or power to give, maintain, or protect collateral to secure payment;

(ii) An authorization or power to the holder to confess judgment or realize on or dispose

of collateral; or

(iii) A waiver of the benefit of any law intended for the advantage or protection of an

obligor.

Promissory Notes. A promissory note is a

document signed by the person making the

document, containing an unconditional promise

to pay a fixed sum of money to a named person,

to the order of a named person, or to the

bearer (the person who is in physical possession)

of the document.

The loans that we deal with everyday are

typically formalized in promissory notes, and

since they often provide for payments over

time, they function to provide credit to the

borrower who is the maker of the note.

Debenture. A debenture is a document, that

either creates a debt or acknowledges it.

Debentures are generally freely transferrable by

the debenture holder.

Certificate of Deposit. A certificate of deposit

(CD) is a document from a bank, which indicates

that a specific sum of money has been

deposited and promises to repay that sum with

interest to the order of the depositor, or to

some other person’s order.

Bill of Exchange. A bill of exchange is a three-

party written order signed by the first party

(the drawer), requiring the second party (the

drawee) to make a specified payment to a third

party (the payee) on demand or at a fixed

future date.

Letter of Credit. A letter of credit is a

document provided by a financial institution as

a guarantee that a specific sum of money will

be paid once stated conditions have been met.

Allonge. A slip of paper affixed to a negotiable instrument for the purpose of receiving additionalendorsements. Typically, allonges are only used when there is no more room for endorsements onthe instrument itself. Allonges must be affixed to the original negotiable instrument.

Bearer. Any person or entity that is in possession of a check, promissory note bank draft, bond orother document; the holder of an instrument.

Bearer Paper. A negotiable instrument, which is payable to whoever has possession (is the bearer).

Drawee. A person or bank that is ordered by its depositor, a drawer, to withdraw money from anaccount to pay a designated sum to a person according to the terms of a check or a draft.

Drawer. A person who signs or is identified in a draft as a person ordering payment.

Issuer. Applies to issued and unissued instruments and means a maker or drawer of an instrument.

Maker. A person who signs or is identified in a note as a person undertaking to pay. One who signs acheck; in this context, synonymous with drawer. One who issues a promissory note or certificate ofdeposit.

Remitter. A person who purchases an instrument from its issuer, if the instrument is payable to anidentified person other than the purchaser.

In this context, the word negotiable means transferable; it does not mean opento discussion or modification, as it does in a litigation context. Negotiabilityallows the transfer of ownership from one party (the transferor) to another(the transferee) by delivery or indorsement. Indorsement is the action ofsigning an instrument to make it payable to another person or cashable by anyperson.

O.C.G.A. § 11-3-201

(a) "Negotiation" means a transfer of possession, whether voluntary orinvoluntary, of an instrument by a person other than the issuer to aperson who thereby becomes its holder.

(b) Except for negotiation by a remitter, if an instrument is payable to anidentified person, negotiation requires transfer of possession of theinstrument and its indorsement by the holder. If an instrument ispayable to bearer, it may be negotiated by transfer of possession alone.

(a) "Indorsement" means a signature, other than that

of a signer as maker, drawer, or acceptor, that

alone or accompanied by other words is made on

an instrument for the purpose of (i) negotiating

the instrument; (ii) restricting payment of the

instrument; or (iii) incurring indorser's liability on

the instrument; but regardless of the intent of

the signer, a signature and its accompanying

words is an indorsement unless the accompanying

words, terms of the instrument, place of the

signature, or other circumstances unambiguously

indicate that the signature was made for a

purpose other than indorsement. For the purpose

of determining whether a signature is made on

an instrument, a paper affixed to the instrument

is a part of the instrument.

(b) "Indorser" means a person who makes an

indorsement.

There are a variety of ways to indorse a instrument, including special indorsements, blankindorsements, and anomalous indorsements.

O.C.G.A. § 11-3-205. Special indorsement; blank indorsement; anomalous indorsement

(a) If an indorsement is made by the holder of an instrument, whether payable to an identifiedperson or payable to bearer, and the indorsement identifies a person to whom it makes theinstrument payable, it is a "special indorsement." When specially indorsed, an instrument becomespayable to the identified person and may be negotiated only by the indorsement of that person.

(b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, itis a "blank indorsement." When indorsed in blank, an instrument becomes payable to bearer andmay be negotiated by transfer of possession alone until specially indorsed.

(c) The holder may convert a blank indorsement that consists only of a signature into a specialindorsement by writing, above the signature of the indorser, words identifying the person to whomthe instrument is made payable.

(d) "Anomalous indorsement" means an indorsement made by a person who is not the holder of theinstrument. An anomalous indorsement does not affect the manner in which the instrument maybe negotiated.

(a) An instrument is transferred when it is delivered by a person, other

than its issuer, for the purpose of giving to the person receiving delivery

the right to enforce the instrument.

(b) Transfer of an instrument, whether or not the transfer is a

negotiation, vests in the transferee any right of the transferor to enforce

the instrument, including any right as a holder in due course, but the

transferee cannot acquire the rights of a holder in due course by a

transfer, directly or indirectly, from a holder in due course if the

transferee engaged in fraud or illegality affecting the instrument.

The holder in due course doctrine is acommercial law rule that facilitates transfer ofdebt or other obligation to pay to parties notconnected to the original transaction.

As a general rule, a holder in due course isinsulated from any challenges by either party ofthe original transaction due to non-performanceby the other party.

For example, if A promised to pay some moneyto B and B transferred that obligation to C, thenC is insulated from any conflict arising betweenA and B. A may then sue B for non-performance,but is still obligated to pay the originalobligation to C.

Status as a holder in due course is anaffirmative defense against all legal claims thedebtor may have against the original creditor. Inother words, a holder in due course does notbecome responsible for the original creditor'salleged misdeeds in the original credittransaction.

Under Georgia Law, a holder in due course is one who, in good faith and for value, has taken an

instrument that is complete and regular upon its face before it was due, and without notice of any

previous dishonor, and who, at the time of taking, had no notice of any infirmity in the instrument

or defect in the title of the person negotiating it. Equitable Disct. Corp. v. Guest, 103 Ga. App.

258, 118 S.E.2d 864 (1961) (decided under former Code 1933, §§ 14-502 and 14-507).

More specifically, the O.C.G.A. states that a "holder in due course" means the holder of an

instrument if:

(1) The instrument when issued or negotiated to the holder does not bear such apparent evidence

of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its

authenticity; and

(2) The holder took the instrument:

(i) For value;

(ii) In good faith;

(iii) Without notice that the instrument is overdue or has been dishonored or that there is an

uncured default with respect to payment of another instrument issued as part of the same series;

(iv) Without notice that the instrument contains an unauthorized signature or has been altered;

(v) Without notice of any claim to the instrument; and

(vi) Without notice that any party has a defense or claim in recoupment.

A Discussion of Presentment

A holder in due course may enforce its rights by

presentment, which is discussed in § 11-3-501 of

the O.C.G.A.

Presentment is a demand made by or on behalf

of a person entitled to enforce an instrument to

(i) pay the instrument made to the drawee or a

party obliged to pay the instrument or, in the

case of a note or accepted draft payable at a

bank, to the bank; or (ii) accept a draft made

to the drawee.

Presentment may be made at the place of

payment of the instrument and must be made at

the place of payment if the instrument is

payable at a bank in the United States.

Presentment may be made by any commercially

reasonable means, including an oral, written, or

electronic communication.

Presentment is effective when the demand forpayment or acceptance is received by theperson to whom presentment is made and iseffective if made to any one of two or moremakers, acceptors, drawee, or other payors.

Upon demand of the person to whompresentment is made, the person makingpresentment must (i) Exhibit the instrument;(ii) Give reasonable identification and, ifpresentment is made on behalf of anotherperson, reasonable evidence of authority to doso; and (iii) Sign a receipt on the instrument forany payment made or surrender the instrumentif full payment is made.

Without dishonoring the instrument, the partyto whom presentment is made may: i) Returnthe instrument for lack of a necessaryindorsement; or (ii) Refuse payment oracceptance for failure of the presentment tocomply with the terms of the instrument, anagreement of the parties, or other applicablelaw or rule.

A person who transfers an instrument for

consideration warrants to the transferee and, if

the transfer is by indorsement, to any

subsequent transferee that:

(1) The warrantor is a person entitled to enforce the

instrument;

(2) All signatures on the instrument are authentic

and authorized;

(3) The instrument has not been altered;

(4) The instrument is not subject to a defense or

claim in recoupment of any party which can be

asserted against the warrantor; and

(5) The warrantor has no knowledge of any

insolvency proceeding commenced with respect

to the maker or acceptor or, in the case of an

unaccepted draft, the drawer.

Breaching this warranty will subject the

warrantor/transferor to damages.

These warranties cannot be disclaimed with

respect to checks. Unless notice of a claim for

breach of warranty is given to the warrantor

within 30 days after the claimant has reason to

know of the breach and the identity of the

warrantor, the liability of the warrantor is

discharged to the extent of any loss caused by

the delay in giving notice of the claim.

A cause of action for breach of warranty under

this Code section accrues when the claimant has

reason to know of the breach.

In addition to the protection afforded under this

code section, transferees are also provided with

some assurance under O.C.G.A. § 11-3-417.

If an unaccepted draft (i.e. a bad check) is presented to the drawee (i.e. a bank) for payment or acceptance, and the drawee pays or accepts the draft, the person obtaining payment or acceptance, at the time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee making payment or accepting the draft in good faith that:

(1) The warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment of the draft on behalf of a person entitled to enforce the draft;

(2) The draft has not been altered; and

(3) The warrantor has no knowledge that the signature of the drawer of the draft is unauthorized.

A drawee making payment may recover from any warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment.

In addition, the drawee is entitled to

compensation for expenses and loss of interest

resulting from the breach.

The right of the drawee to recover damages under

this subsection is not affected by any failure of

the drawee to exercise ordinary care in making

payment.

If the drawee accepts the draft, breach of

warranty is a defense to the obligation of the

acceptor. If the acceptor makes payment with

respect to the draft, the acceptor is entitled to

recover from any warrantor for breach of warranty

the amounts stated in this subsection.

The warranties stated in subsections (a) and (d) of

this Code section cannot be disclaimed with

respect to checks. Unless notice of a claim for

breach of warranty is given to the warrantor

within 30 days after the claimant has reason to

know of the breach and the identity of the

warrantor, the liability of the warrantor is

discharged to the extent of any loss caused by the

delay in giving notice of the claim.

O.C.G.A. § 11-3-309. Enforcement of lost, destroyed, or stolen instrument.

(a) A person not in possession of an instrument is entitled to enforce the instrument if (i) the person

was in possession of the instrument and entitled to enforce it when loss of possession occurred; (ii)

the loss of possession was not the result of a transfer by the person or a lawful seizure; and (iii) the

person cannot reasonably obtain possession of the instrument because the instrument was

destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown

person or a person that cannot be found or is not amenable to service of process.

(b) A person seeking enforcement of an instrument under subsection (a) of this Code section must

prove the terms of the instrument and the person's right to enforce the instrument.

The court may not enter judgment in favor of the person seeking enforcement unless it finds that

the person required to pay the instrument is adequately protected against loss that might occur by

reason of a claim by another person to enforce the instrument. Adequate protection may be

provided by any reasonable means.

Under § 11-3-504 of the O.C.G.A., presentment for payment or acceptance of aninstrument is excused if:

(i) the person entitled to present the instrument cannot with reasonable diligencemake presentment;

(ii) the maker or acceptor has repudiated an obligation to pay the instrument, isdead, or is in insolvency proceedings;

(iii) by the terms of the instrument, presentment is not necessary to enforce theobligation of indorsers or the drawer;

(iv) the drawer or indorser whose obligation is being enforced has waivedpresentment or otherwise has no reason to expect or right to require that theinstrument be paid or accepted; or

(v) the drawer instructed the drawee not to pay or accept the draft or the draweewas not obligated to the drawer to pay the draft.

Quick Facts. The Longans executed apromissory note to Jacob B. Carpenter for thesum of $980.00 payable in six months with aninterest rate of 3.5% per month until paid, andMahala Longan executed to a mortgage on thereal property in favor of Jacob Carpenter. Themortgage was conditioned for the payment ofthe note at maturity, according to its terms.

On July 24, 1867, more than two months beforethe maturity of the note, Jacob B. Carpenter,for a valuable consideration, assigned the noteand mortgage to B. Platte Carpenter, theappellant. The Longans defaulted on the note,and the appellant sued Mahala Longan, in theDistrict Court of Jefferson County, ColoradoTerritory, to foreclose the mortgage.

Mahala Longan claimed that she gave Jacob Carpenterwheat and flour, which he promised to sell and to applythe proceeds of the sale to the payments of the note.Some of the wheat and flour was sold by a third party andsome was lost by the warehousemen’s failure.

Issue. Whether an assignee, under the circumstances ofthis case, takes the mortgage as he takes the note, freefrom the objections to which it was liable in the hands ofthe mortgagee.

Holding. The court held in the affirmative.

Rationale. The contract, on its face, stated that themaker must pay it at maturity to any bona fide endorsee,without reference to any defenses to which it might havebeen liable in the hands of the payee. The mortgage wasconditioned to secure the fulfillment of that contract. Tolet in such a defense against such a holder [of the note]would be a clear departure from the agreement of themortgagor and mortgagee, to which the assigneesubsequently, in good faith, became a party. If themortgagor desired to reserve such an advantage, heshould have given a non-negotiable instrument. If one oftwo innocent persons must suffer by a deceit, it is moreconsonant to reason that he who puts trust andconfidence in the deceiver should be a loser rather than astranger.

Debtors attorneys most often cite to this case in order to challenge chain of title and standing, based onthe fact that the Court stated, "the note and mortgage are inseparable; the former as essential, the latteras an incident. An assignment of the note carries the mortgage with it, while an assignment of the latteralone is a nullity."

Increasingly, courts in various jurisdictions have enforced this ruling and have held that in order for amovant to have any standing to bring a cause of action, the movant must hold both the note and themortgage.

This becomes problematic in instances when the note instrument is bifurcated from the securityinstrument.

For example, in the case of Taylor v. Deutsche Bank National Trust Company, Appeal No. 5D09-4035 (5th

District Florida Court of Appeals) the security instrument stated that Mortgage Electronic RegistrationSystems, Inc. (“MERS”) was acting solely as the nominee for the lender, lender's successors, and assigns.The promissory note identified First Franklin A Division of Nat. City Bank of IN as the lender. The note wasnot indorsed by anyone, including First Franklin, and it did not carry an allonge. The security instrumentdid not identify MERS as a payee. Instead, like the promissory note, the security instrument named FirstFranklin A Division of Nat. City Bank of IN as the lender and payee. The security instrument wassubsequently assigned to Deutsche Bank National Trust Company as Trustee for FFMLT 2006-FF4, MortgagePass-Through Certificates, Series 2006-FF4. Deutsche brought a foreclosure action.

The debtor’s attorney challenged Deutsche’s Bank’s standing based on the fact that the assignment was anassignment by MERS of the security instrument only and not the note. The attorney argued that becausethere was no transfer of the note itself to Deutsche Bank, Deutsche Bank lacked standing.

Debtors Attorneys Continue Their Battle Cry…

In an effort to stall or prevent foreclosure and delay bankruptcy proceedings, many

debtors and their attorneys have initiated the "show-me-the-note defense."

Relying on applicable sections of the UCC, debtors and debtors attorney have been

using the missing note argument as early as 2004.

As a result, some debtors have remained in "their home" for several years, and

attorneys have started to file quiet title actions hoping to get debtors full title to

their homes.

In dismissing 14 foreclosure cases in 2007 based on a lack of proper documentation,

a United States District judge in the Northern District of Ohio, Judge Christopher

Boyko, admonished the lenders, stating their argument "Judge, you just don’t

understand how things work," reveals a condescending mindset and quasi-

monopolistic system where financial institutions have traditionally controlled, and

still control, the foreclosure process."

In February 2009, U.S. Rep John Conyers, Jr.(D) Michigan and Marcy Kaptur (D) Ohiointroduced H.R. 1123, currently dubbed the"Produce the Note Act of 2009" which if passedwould essentially prohibit lenders or servicersfrom initiating a foreclosure without firstproving they are the holder of thehomeowner’s note.

Essentially, the Produce the Note Act of 2009seeks to prohibits commencement of anyforeclosure in connection with certainresidential mortgages unless the personcommencing the foreclosure complies withspecified prerequisites, includingidentification of the actual holder of themortgage note, the originating mortgagelender and all subsequent assignees, and otherall parties who have an interest in the realestate subject to the mortgage or in themortgage or its proceeds.

February 23, 2009, H.R. 1123 has been referred to the House Committee on Financial Services.

Introduced

Referred to Committee

Reported by Committee

House Vote

Senate Vote

Signed by President Obama

Issue: Whether the purported holder (Deutsche Bank) of a note allegedly transferred

into a securitized mortgage pool has standing to obtain relief from the automatic

stay.

Facts:

The Debtor executed and delivered a promissory note in the principal sum of

$377,600 to Argent Mortgage secured by a deed of trust. The note was placed in a

securitized mortgage pool.

Under the Pooling and Servicing Agreement dated May 1, 2004, Argent Securities Inc.

("Argent Securities") is listed as the "Depositor," Ameriquest Mortgage Co.

("Ameriquest") is the "Master Servicer," and Deutsche Bank National Trust Co.

("Deutsche") is listed as the "Trustee" and initial custodian ("Initial Custodian").

The debtor eventually defaulted on the note and filed a Chapter 13 bankruptcy

case.

June 29, 2009. American Home Mortgage Servicing ("AHMSI") files a PoC and

attached the note (no endorsements or allonge), the deed of trust, and an

assignment from Argent Mortgage to AHMSI ("Assignment #1"), executed by Citi

Residential as servicer for Argent Mortgage. Assignment #1 was notarized June 25,

2009.

December 8, 2009. Deutsche Bank filed a MFR and attached the note (no

endorsements or allonge), the deed of trust, and an assignment from Argent

Mortgage to Deutsche ("Assignment #2"), executed by AHMSI as servicer for Argent

Mortgage. Assignment #2 was notarized November 12, 2009.

January 5, 2010. Deutsche Bank filed additional documents in support of its MFR,

which included a copy of the note and, on a separate piece of paper, an allonge to

the note, which purported to assign the note from Argent Mortgage to Deutsche.

January 17, 2010. The debtor’s attorney filed a response to the MFR, challengingDeutsche Bank’s standing to seek relief from stay, which raised a number of otherarguments, including a claim that:

1. Deutsche was required to provide documentation for every assignment of thenote and deed of trust (complete chain);

2. Only certificate holders of the pool can demonstrate standing; and3. That the debtor is entitled to credit for any third-party payments made to the

pool’s certificate holders.

June 18, 2010. Deutsche Bank filed a declaration asserting that Deutschebecame the holder of the note "when an allonge affixed to the originalpromissory note transferring the note to Movant was executed by Karen [sic]Smith" pursuant to the 2007 Limited Power of Attorney from Argent Mortgage toCiti Residential along with various other documents.

June 23, 2010. An evidentiary hearing was held and revealed that the therewere discrepancies between the original note and the copies attached the PoCand MFR (the discrepancy related to various endorsements).

The Court identified several problems with the

allonge including the fact that:

1. The allonge did not demonstrate that

Deutsche Bank had standing to seek relief

from stay when it filed the MFR or anytime

thereafter.

2. Deutsche’s witness admitted that the allonge

was created after the MFR was filed to "get

the attorneys the information they needed."

3. Creation of evidence to support a motion for

relief from stay, after filing has been found to

violate Fed. R. Bankr. P. 9011(b)(3).

4. Deutsche’s witness also admitted that the

allonge had not been attached to the original

note, but to a copy. The allonge, therefore,

was never properly affixed to the note and

could not accomplish a transfer of the note

under Arizona law.

5. The allonge was ineffective to transfer the

note to Deutsche Bank, because the party

executing the Allonge had no authority to do

so (the Limited Power of Attorney only

authorized assignments in specific

circumstances not present in this case).

The court found that because the allonge was

ineffective (as well as fabricated after the

fact), Deutsche’s standing depended on the

validity of the endorsements.

Deutsche claimed that it was the holder of the

note because when the original note was finally

produced, it contained an endorsement in

blank.

Under Arizona law, when an instrument is

endorsed in blank, it becomes a bearer

instrument, and may be negotiated by transfer

of possession alone.

The court acknowledged that normally, the

UCC presumes the genuineness of signatures in

negotiable instruments. However, under Arizona

law, when the validity of an endorsement is

challenged, the burden of demonstrating

authenticity is on the party asserting it.

Deutsche failed to demonstrate that the endorsements were executed by a party with authority,acting for an entity that owned the note when the endorsements were executed.

Deutsche’s witness did not know the identity of the parties who executed the endorsements or thedate the endorsements were executed.

The endorsements did not satisfy the relevant portions of the Pooling and Servicing Agreementbecause, even if they were assumed to be valid, there was no endorsement from Argent Mortgage(the originator of the Note) in blank or to Deutsche.

Deutsche Bank failed to offer into evidence the "Mortgage Schedule" referred to in the Pooling andServicing Agreement. So there was nothing, which identified the note as having been transferredto the pool through the Pooling and Servicing Agreement.

Deutsche did not offer into evidence any document which demonstrates that the note was, in fact,sold to Deutsche under the Mortgage Loan Purchase Agreement.

The Mortgage Loan Purchase Agreement identifies a "Closing Schedule" which listed all notes andmortgages being sold to Deutsche, but Deutsche did not offer it (or any other document) intoevidence to demonstrate that the note was actually transferred into the pool.

The court stated that it was actually "puzzled" by Deutsche’s inability to offer competent evidenceof its standing.

Given the deficient and misleading nature of

Deutsche’s filings, the court seriously

considered issuing an order to show cause as to

why sanctions should not be imposed on

Deutsche, its servicer, and its lawyers.

No sua sponte sanctions order were issued.

The court warned that Deutsche, AHMSI and

counsel should treat this decision as a warning.

The court stated that if, in the future, the court

is confronted with filings as deficient and

incorrect as filed in this case, the court will

issue an order to show cause and consider

imposing sanctions including, but not limited to,

an award of fees to debtors’ counsel for having

to oppose motions filed without proper evidence

or worse with improper evidence.

The court found that Deutsche failed to satisfy its burden of

demonstrating that it is a "party in interest" under 11 U.S.C. §362

(d)(1) entitled to relief from the automatic stay.

Relief was not granted.

Encourage clients to submit all relevant documents BEFORE filing aPoC or MFR.

Avoid filing PoC or MFRs with the intention of subsequently amendingthe claim or compliant to support standing.

Carefully review all relevant documents prior to filing, and identifyand anticipate possible issues.

When faced with challenges to standing, provide the court withevidence that actually supports standing. Do not assume that thecourt should know anything about why your client is the proper partyto the proceedings even if no other creditors are claiming an interestin the property, and the debtor himself admits/acknowledges thedebt.

Do not rely on mortgage industry standard “status quo” arguments.

Q & A