note holder – DTC Systems Inc

Failure to Allege Lack of Default

By Daniel Edstrom
DTC Systems, Inc.

One of the main reasons many cases do not make it to daylight is because of the failure to allege lack of default. Despite many lawyers knowing that this is the case, and that there is no default, many still fail to make the allegation. On what basis can a lawyer allege lack of default for a homeowner facing foreclosure?

The Note and Security Instrument

The note is not the obligation but evidence of the obligation (for proof of this, in many cases the security instrument refers to the note as the evidence of the obligation). Lawyers usually describe the obligation arising when one party accepts money from another party. The note usually describes who the parties are that are obligated in the section titled OBLIGATIONS OF PERSONS UNDER THIS NOTE. This section of the note states:

If more than one person signs this Note, each person is fully and personally obligated to keep all of the promises made in this Note, including the promise to pay the full amount owed. Any person who is a guarantor, surety or endorser of this Note is also obligated to do these things. Any person who takes over these obligations, including the obligations of a guarantor, surety or endorser of this note, is also obligated to keep all of the promises made in this Note. The Note Holder may enforce its rights under this Note against each person individually or against all of us together. This means that any one of us may be required to pay all of the amounts owed under this Note.

Continue reading “Failure to Allege Lack of Default”

Texas Ropes One In: Motion to Dismiss Denied

By Daniel Edstrom
DTC Systems, Inc.
http://www.dtc-systems.net

From April Charney:

…”If the holder of the deed of trust does not own or hold the note, the deed of trust serves no purpose, is impotent, and cannot be a vehicle for depriving the grantor of the deed of trust of ownership of the property described in the deed of trust….[finding that]…inherent in the procedural steps outlined in the Texas Property Code is the assumption that whatever entity qualifies as a “mortgagee” either owns the note or is serving as an agent for the owner or holder of the note; and, the statute assumes that when a foreclosure is conducted by someone other than the owner or holder of the note, the person conducting the foreclosure will be acting as agent or nominee for the owner or holder…Otherwise, the Texas statutory law would make no sense, and would be directly at odds with long-standing, basic principles governing the relationship between real estate borrowers, on the one hand, and their corresponding secured real estate lenders, on the other.” (edited from the below decision):

JANE McCARTHY, Plaintiff, vs. BANK OF AMERICA, NA, BAC HOME LOANS SERVICING, LP, and FEDERAL HOME LOAN MORTGAGE CORPORATION, Defendants. NO. 4:11-CV-356-A December 22, 2011