Security Instrument Perfected or Unperfected

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					                                        Perfected Security Instrument
                                Follows The Paper Negotiated Promissory Note
                                    The Uniform Commercial Code Theory
   Interest In
Personal Property
        Paper Promissory Note




                                                                                                                                                                        Security Instrument

                                                                                                                                                                         Promissory Note
            UCC Article 3




                                                                                                                                                                           UCC Article 9
             Negotiation




                                                                                                                                                                              Follows
                                                                                         Loan Origination

                                                                           Interest In Real Property
                                                                  U.C.C. – Article 9 ‐Secured Transactions;
                                                                     Sales of Accounts and Chattel Paper
                                                               Part 1. Short Title, Applicability and Definitions
                                                                      § 9-104. Transactions Excluded From Article
                                                                               This Article does not apply
                                                    (j) except to the extent that provision is made for fixtures in Section 9-313, to
                                                       the creation or transfer of an interest in or lien on real estate, including a
                                                                    lease or rents thereunder - As amended in 1972


                                                                      [Subpart 2. Applicability of Article] [Table of Contents]
                                                                                          § 9‐109. SCOPE.
                                                                                   (d) [Inapplicability of article.]
                                                                                   This article does not apply to:
                (11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:
                                                                      (A) liens on real property in Sections 9‐203 and 9‐308;

                                      § 9‐308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION.
                                                                                    (d) [Supporting obligation.]
                                  Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

© Copyright 2005 by The American Law Institute and the National Conference of Commissioners on Uniform State Laws; reproduced, published and distributed with the permission of the
                          Permanent Editorial Board for the Uniform Commercial Code for the limited purposes of study, teaching, and academic research.


                                    Copyright 2010                                          J.Mcguire       P O Box 1352, Bedford, Texas 76095-1352
                  Assigned – Loss of Perfected Security Instrument
               Does Not Follow The Paper Negotiated Promissory Note

   Interest In
Personal Property




                                                                                                                                                                     Security Instrument In MERS as



                                                                                                                                                                      Loss of Continued Perfection
        Paper Promissory Note




                                                                                                                                                                         Name Does Not Follow
                                                                                                                                                                            Promissory Note
            UCC Article 3




                                                                                                                                                                               UCC Article 9
             Negotiation




                                                                                                                                                                                Nominee
                                                                                                                                                                          Loss of
                                                                                                                                                                         Perfection




                                                                                         Loan Origination

                                                                           Interest In Real Property
                                                                  U.C.C. – Article 9 ‐Secured Transactions;
                                                                     Sales of Accounts and Chattel Paper
                                                               Part 1. Short Title, Applicability and Definitions
                                                                      § 9-104. Transactions Excluded From Article
                                                                               This Article does not apply
                                                    (j) except to the extent that provision is made for fixtures in Section 9-313, to
                                                       the creation or transfer of an interest in or lien on real estate, including a
                                                                    lease or rents thereunder - As amended in 1972


                                                                      [Subpart 2. Applicability of Article] [Table of Contents]
                                                                                          § 9‐109. SCOPE.
                                                                                   (d) [Inapplicability of article.]
                                                                                   This article does not apply to:
                (11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:
                                                                      (A) liens on real property in Sections 9‐203 and 9‐308;

                                      § 9‐308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION.
                                                                                    (d) [Supporting obligation.]
                                  Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

© Copyright 2005 by The American Law Institute and the National Conference of Commissioners on Uniform State Laws; reproduced, published and distributed with the permission of the
                          Permanent Editorial Board for the Uniform Commercial Code for the limited purposes of study, teaching, and academic research.

                                    Copyright 2010                                          J.Mcguire       P O Box 1352, Bedford, Texas 76095-1352
                     Non-Perfected Security Instrument
         Does Not Follow The Electronic Negotiated Promissory Note

   Interest In
Personal Property




                                                                                                                                                                      Security Instrument In MERS as Nominee
      Electronic Promissory Note
         Lacks Supporting Law




                                                                                                                                                                                Name Does Not Follow

                                                                                                                                                                                  Invalid Perfection
                                                                                                                                                                                   Promissory Note
             UCC Article 3
              Negotiation




                                                                                                                                                                                     UCC Article 9
                 Scanned To
                  Electronic



                                                                                          Loan Origination

                                                                            Interest In Real Property
                                                                   U.C.C. – Article 9 ‐Secured Transactions;
                                                                      Sales of Accounts and Chattel Paper
                                                                Part 1. Short Title, Applicability and Definitions
                                                                       § 9-104. Transactions Excluded From Article
                                                                                This Article does not apply
                                                     (j) except to the extent that provision is made for fixtures in Section 9-313, to
                                                        the creation or transfer of an interest in or lien on real estate, including a
                                                                     lease or rents thereunder - As amended in 1972


                                                                       [Subpart 2. Applicability of Article] [Table of Contents]
                                                                                           § 9‐109. SCOPE.
                                                                                    (d) [Inapplicability of article.]
                                                                                    This article does not apply to:
                 (11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:
                                                                       (A) liens on real property in Sections 9‐203 and 9‐308;

                                       § 9‐308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION.
                                                                                     (d) [Supporting obligation.]
                                   Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

© Copyright 2005 by The American Law Institute and the National Conference of Commissioners on Uniform State Laws; reproduced, published and distributed with the permission of the
                          Permanent Editorial Board for the Uniform Commercial Code for the limited purposes of study, teaching, and academic research.


                                     Copyright 2010                                          J.Mcguire       P O Box 1352, Bedford, Texas 76095-1352
       Real – Personal (UCC – E-Sign – UETA)
Interest In Real Property                                                                 Interest In Personal Property




                                                                     Collateral




           Negotiation 4




                                                                     Collateral




           Negotiation 3




                                                                      Collateral




           Negotiation 2




                                                                      Collateral




           Negotiation 1



                                    Interest In Real Property
                              U.C.C. – Article 9 ‐Secured Transactions;
                                 Sales of Accounts and Chattel Paper
                           Part 1. Short Title, Applicability and Definitions
                                   § 9-104. Transactions Excluded From Article
                                            This Article does not apply
                 (j) except to the extent that provision is made for fixtures in Section 9-313, to
                    the creation or transfer of an interest in or lien on real estate, including a
                                 lease or rents thereunder - As amended in 1972


Copyright 2010                             J.Mcguire    P O Box 1352, Bedford, Texas 76095-1352 (Version 1)
                     Fannie Mae – Freddie Mac
    Real Property Laws                                                                         Personal Property Laws




                                                                     Collateral




           Negotiation 3




                                                                      Collateral




           Negotiation 2




                                                                      Collateral




           Negotiation 1



                                    Interest In Real Property
                              U.C.C. – Article 9 ‐Secured Transactions;
                                 Sales of Accounts and Chattel Paper
                           Part 1. Short Title, Applicability and Definitions
                                   § 9-104. Transactions Excluded From Article
                                            This Article does not apply
                 (j) except to the extent that provision is made for fixtures in Section 9-313, to
                    the creation or transfer of an interest in or lien on real estate, including a
                                 lease or rents thereunder - As amended in 1972


Copyright 2010                             J.Mcguire    P O Box 1352, Bedford, Texas 76095-1352 (Version 1)
(a) Except as otherwise provided in subsection (b), this [Act] applies to electronic records and electronic signatures relating to a transaction.

(b) This [Act] does not apply to a transaction to the extent it is governed by:
           (1) a law governing the creation and execution of wills, codicils, or testamentary trusts;     .
           (2) [The Uniform Commercial Code other than Sections 1‐107 and 1‐206, Article 2, and Article 2A];
           (3) [the Uniform Computer Information Transactions Act]; and
           (4) [other laws, if any, identified by State].

SECTION 16. TRANSFERABLE RECORDS

(a) In this section, “transferable record” means an electronic record that:

           (1) would be a note under [Article 3 of the Uniform Commercial Code] or a document under [Article 7 of the Uniform Commercial Code] if the
           electronic record were in writing; and
           (2) the issuer of the electronic record expressly has agreed is a transferable record.




1. Paper negotiable instruments and documents are unique in the fact that a tangible token – a piece of paper – actually embodies intangible rights and
obligations. The extreme difficulty of creating a unique electronic token which embodies the singular attributes of a paper negotiable document or
instrument dictates that the rules relating to negotiable documents and instruments not be simply amended to allow the use of an electronic record for the
requisite paper writing. However, the desirability of establishing rules by which business parties might be able to acquire some of the benefits of
negotiability in an electronic environment is recognized by the inclusion of this section on Transferable Records.

This section provides legal support for the creation, transferability and enforceability of electronic note and document equivalents, as against the issuer/
obligor. The certainty created by the section provides the requisite incentive for industry to develop the systems and processes, which involve significant
expenditures of time and resources, to enable the use of such electronic documents…………..

2. The definition of transferable record is limited in two significant ways.

First, only the equivalent of paper promissory notes and paper documents of title can be created as transferable records. Notes and Documents of Title do
not impact the broad systems that relate to the broader payments mechanisms related, for example, to checks. Impacting the check collection system by
allowing for “electronic checks” has ramifications well beyond the ability of this Act to address.

Accordingly, this Act excludes from its scope transactions governed by UCC Articles 3 and 4. The limitation to promissory note equivalents in Section 16 is
quite important in that regard because of the ability to deal with many enforcement issues by contract without affecting such systemic
concerns……………………………………




§ 7003. Specific exceptions

(a) Excepted requirements

The provisions of section 7001 of this title shall not apply to a contract or other record to the extent it is governed by—

           (1) a statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts;
           (2) a State statute, regulation, or other rule of law governing adoption, divorce, or other matters of family law; or
           (3) the Uniform Commercial Code, as in effect in any State, other than sections 1–107 and 1–206 and Articles 2 and 2A.
                                     Underlying Collateral
                              Secondary Market Investment Vehicle
                                           Tangible
Promissory               Security         Intangible
   Note                Instrument
 Lender 5              Laws Local
UCC Article 3          Jurisdiction                                                                                      Secondary Market
                                                                                                                             Custodian
             Electronic                                                                                                     (Lender 5)
             Mortgage
              Package                         Transfer
     (Certificate’s Collateral)                 Lien         Negotiation #4 of Note
             [Trustee]                         Rights      Recordation (Lien Perfection)
                                                               Security Instrument                                    Investment Vehicle
                                                 #4
                                                                                                                Pooling & Servicing Agreement

Promissory                Security
   Note                 Instrument
 Lender 4               Laws Local
UCC Article 3           Jurisdiction                                                                                     Secondary Market
                                                                                                                             Trustee
             Electronic                                                                                                     (Lender 4)
             Mortgage
              Package                         Transfer
     (Certificate’s Collateral)                 Lien          Negotiation #3 of Note
            [Depositor]                        Right       Recordation (Lien Perfection)
                                                               Security Instrument                                    Investment Vehicle
                                                 #3
                                                                                                                Pooling & Servicing Agreement

Promissory                Security
   Note                 Instrument
 Lender 3               Laws Local
UCC Article 3           Jurisdiction                                                                                     Secondary Market
                                                                                                                             Depositor
             Electronic                                                                                                     (Lender 3)
             Mortgage
              Package                         Transfer
     (Certificate’s Collateral)                 Lien          Negotiation #2 of Note
           [Securitizer]                       Rights       Recordation (Lien Perfection)
                                                 #2             Security Instrument                                   Investment Vehicle
                                                                                                                Pooling & Servicing Agreement

Promissory                Security
   Note                 Instrument
 Lender 2               Laws Local
UCC Article 3           Jurisdiction                                                                                     Secondary Market
                                                  Investment Vehicle with Underlying Collateral
                                                                                                                            Securitizer
                                                                                                                            (Lender 2)
              Electronic                             Transfer
              Mortgage                                 Lien                Paper Documents
               Package                                Rights                    Vaulted
      (Certificate’s Collateral)                        #1                   Or Destroyed



                                                          Collateral (Mortgage Package)
                                                         Conversion – Paper to Electronic

                                                Promissory                             Security                     Negotiation #1 of Note
         Negotiation #1 Of                         Note                              Instrument                  Recordation (Lien Perfection)
          Electronic Note                        Lender 1                                                            Security Instrument
                                               UCC Article 3                        UCC Article 9




                                                                                                            Security
                                 Paper                         Paper Mortgage Package                     Instrument
                               Promissory
                                                                                                           Perfection
                                  Note
                                                                                                            Lender 1
                                Lender 1
                              UCC Article 3                Loan Origination                              Laws of Local
                                                                                                          Jurisdiction

                           Copyright 2010 J.McGuire P O Box 1352, Bedford, Texas            76095-1352   Rev (1) May 27, 2010
           Owner’s
    Home Owner s
  p             y
Paper Promissory Note
          &
 Security Instrument
 S     it I t      t


   Where       ?
   Wh did it go?

     Copyright 2010 j.mcguire P O Box 1352
            Bedford, Texas 76095-1352        1
Wet Ink Signed Paper Closing

        Copyright 2010     j.mcguire     P O Box 1352 
                                                         2
               Bedford, Texas 76095‐1352
                       Willful-Intentional
   Original                                                    Electronic
                         Voluntary Act
    Paper                                                       Records
  Documents




SCAN/COPY/STORE DESTROY
SCAN/COPY/STORE-DESTROY
  PAPER TO ELECTRONIC
              Copyright 2010     j.mcguire     P O Box 1352 
                                                                            3
                     Bedford, Texas 76095‐1352
                               Original
                               Wet Ink
                               Signed




Destroyed                                                Stored




       Destroyed or Stored

            Copyright 2010 j.mcguire     P O Box 1352 
                                                                  4
                   Bedford, Texas 76095‐1352
 Lender                                                         MERS
   1                                                         Public Records



                                    Negotiation Electronic
                                      Promissory Note


 Lender
                                                               y
                                           Electronic Promissory Note
   2




MERS as Nominee (Secur ity Instr ument)
   Lender (Negotiable Instr ument)

            Copyright 2010     j.mcguire     P O Box 1352 
                                                                              5
                   Bedford, Texas 76095‐1352
           Lender Combines
           Additional Instruments
           Electronic Collateral




                                                      Mortgage Backed Security




   Mortgage Backed Security
Owner of Electronic Promissory Note
           Copyright 2010     j.mcguire     P O Box 1352 
                                                                                 6
                  Bedford, Texas 76095‐1352
Mortgage Backed Security




                                                      Trustee Holds Electronic
                                                      Collateral for Benefit of
                                                        Certificate Owners




          Investment Vehicles
                   Copyright 2010     j.mcguire     P O Box 1352 
                                                                                  7
                          Bedford, Texas 76095‐1352
    Collateral                                               Exotic




Investment Vehicle Collateral
   Electronic Documents
            Copyright 2010     j.mcguire     P O Box 1352 
                                                                      8
                   Bedford, Texas 76095‐1352
                     Electronic
                     Promissory
                        Note

     Electronic Negotiable Instruments
     El         N      bl I
           Lack Supporting Laws


                        Security
                      Instrument


     Failure to Maintain Perfected Lien
              (Public Records)


Homeowner/Bank Foreclosure
    The Banks Fight
          Copyright 2010     j.mcguire     P O Box 1352 
                                                           9
                 Bedford, Texas 76095‐1352
Storage                                                                       Create
 Vault                                Legal Department
                                                                              Print




            Notice of Assignments filed in Public Records
  Created and Filed by Banks Law Firms to give Illusion Of Legality

      Original Paper (When Available) Retrieved from Storage
     When Originals Unavailable (Lost Note Affidavits Applied)
             (Print Out of Electronic Digitized Electronic Promissory Note)




                          Banks Law Firms
                          Retrieve or Create
                        (Illusion of Legality)
                        (              g y)

                       Copyright 2010     j.mcguire     P O Box 1352 
                                                                                       10
                              Bedford, Texas 76095‐1352
                                      Sell/Resell




                                        Recycle
 Loss to I
 L       Investors
1099 Homeowners                                                       Foreclose



                 Homeowner Collection Servicing Fee
                      Certificate Servicing Fee
                     Need More Servicing Fees
                   Need More Profit for the Pocket



                       g
          Do It To Me Again!
                     Copyright 2010     j.mcguire     P O Box 1352 
                                                                                  11
                            Bedford, Texas 76095‐1352
              Owner’s
      Home Owner s
   Paper Promissory Note
             &
    Security Instrument


Collateral in Mortgage Backed
           Securities
        Copyright 2010 j.mcguire P O Box 1352, 
                                                  1
              Bedford, Texas 76095‐1352
Wet Ink Signed Paper Closing
         Copyright 2010 j.mcguire P O Box 1352, 
                                                   2
               Bedford, Texas 76095‐1352
SCAN/COPY/STORE‐DESTROY
SCAN/COPY/STORE DESTROY
  PAPER TO ELECTRONIC
      Copyright 2010 j.mcguire P O Box 1352, 
                                                3
            Bedford, Texas 76095‐1352
                                                  Approval



        Analysis


                                                  Rejection




  ELECTRONIC COPIES PROVIDED
  ELECTRONIC COPIES PROVIDED
FOR ANALYSIS TO RATING AGENCIES


        Copyright 2010 j.mcguire P O Box 1352, 
                                                              4
              Bedford, Texas 76095‐1352
Lender                                                   MERS
  1                                                   Public Records




Lender
  2




         MERS as Nominee
            Copyright 2010 j.mcguire P O Box 1352, 
                                                                       5
                  Bedford, Texas 76095‐1352
                                                      Insurance Policy

      Electronic Collateral




     Mortgage Backed Security

          (Exotic Carrier Evaluates
        Electronic Furnished Copies)
                                                         Insurance
                                                          Carrier

 gg g          g g
Aggregated Mortgage Pool
            Copyright 2010 j.mcguire P O Box 1352, 
                                                                         6
                  Bedford, Texas 76095‐1352
               g g                y
           Mortgage Backed Security




  Exotic
    1


                                                     Exotic
                                                       2



Default Investment Vehicles
           Copyright 2010 j.mcguire P O Box 1352, 
                                                              7
                 Bedford, Texas 76095‐1352
     Collateral                                         Exotic




Exotic Collateral - Electronic

              Copyright 2010 j.mcguire P O Box 1352, 
                                                                 8
                    Bedford, Texas 76095‐1352
                   Electronic
                   Promissory
                      Note

     Electronic Negotiable Instruments
           Lack Supporting Laws



                      Security
                    Instrument


     Failure to Maintain Perfected Lien
              (Public Records)

Homeowner/Bank Foreclosure
    The Banks Fight
           Copyright 2010 j.mcguire P O Box 1352, 
                                                     9
                 Bedford, Texas 76095‐1352
             Notice of Assignments filed in Public Records
   Created and Filed by Banks Law Firms to give Illusion Of Legality
                     (Fraud upon Public Records)
                           If Filed in Court
                        (Fraud upon the Court)



Bank’s Law Firms Create Documents
B k’ L Fi          C      D
        (              g y)
        (Illusion of Legality)
                       Copyright 2010 j.mcguire P O Box 1352, 
                                                                       10
                             Bedford, Texas 76095‐1352
                               Mortgage Electronic Registration Systems, Inc. (MERS):
                    Its Impact on The Credit Quality of First‐Mortgage Jumbo MBS Transactions
                    Its Impact on The Credit Quality of First Mortgage Jumbo MBS Transactions

Although in many states the assignment of mortgage does not have to be recorded when the note is transferred, there are 
some states that require the assignment of mortgage to be recorded so that the buyer of the loan is protected against 
subsequent transferees and creditors of the seller of the mortgage. There are also some states where the law is uncertain as to 
the protection afforded loan buyers against subsequent transferees and creditors of the loan seller.
the protection afforded loan buyers against subsequent transferees and creditors of the loan seller

The name of the beneficial owner of the mortgage will not be a matter of public record. The language in the mortgage or 
assignment of mortgage will read as follows: "MERS, solely as nominee for Lender (as hereinafter defined), as beneficiary, and 
its successors and assigns." If MERS is named in a mortgage or assignment of mortgage, MERSCORP requires that those 
instruments will have to be recorded in the public recording offices.

The original note will be in the possession of the trustee in the MBS transactions. Generally, MERS will not be named on the 
note or the endorsement of the note.

Under common law principles, the mortgage is valid even though the name on the note is different than the name on the 
    t     Th          t f di l d               i b i       t       ti
mortgage. The concept of undisclosed agency in business transactions has been around for a long time. The recording system 
                                                                        h b              df      l   ti    Th     di   t
has been set up to provide notice of security interests, but not necessarily the identity of the secured parties.




                  Moody’s Investor Services
                  Comments (1999) Excerpts
                                            Copyright 2010 j.mcguire P O Box 1352, 
                                                                                                                                  11
                                                  Bedford, Texas 76095‐1352

				
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