The University of New Hampshire Law Review
The Non-Uniform Commercial Code: The Creeping, Problematic Application of Article 9 to Determine Outcomes in Foreclosure Cases
[Excerpt] “This article will discuss the operation of two portions of the Uniform Commercial Code (“U.C.C.”) on mortgage foreclosure law. Article 3 of the U.C.C. governs negotiable instruments, whereas Article 9 governs secured transactions. For decades, courts have utilized Article 3 to determine the rights of lenders and their assigns to enforce mortgage promissory notes and to foreclose mortgages thereon. However, certain jurisdictions do not utilize the U.C.C. in foreclosure cases, whereas other jurisdictions have recently begun to look to Article 9 instead. This article argues that the Uniform Commercial Code should receive more uniform application, with Article 3 as the enforcement tool of the land.
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Parts I-III of this Article will discuss the negotiable nature of mortgage notes, and the significance of this character. Part I will briefly discuss the importance of a plaintiff’s standing to initiate and pursue foreclosure. Part II will analyze the history of both the negotiability of notes and the foreclosure of mortgages. This historical analysis is meant to provide an explication of the divergent paths notes and mortgages have taken, in terms of the predictability of enforcement outcomes and the relative harshness each produces. Part III will discuss the negotiable character of mortgage promissory notes. If a note is a negotiable instrument, then transfer of the note may be analyzed under Article 3. However, even if a note is negotiable, that does not mean that it is not also potentially subject to enforcement under Article 9.
Part IV will provide an overview of enforcement mechanisms utilized in various jurisdictions. This Part will highlight the law in jurisdictions in which Article 3 is applied to determine the standing of foreclosure plaintiffs. Following that, Part IV will review application of common law and other enforcement mechanisms in jurisdictions that do not look to the U.C.C. in determining a plaintiff’s standing to enforce a negotiable instrument and foreclosure the security interest secured thereby. Finally, this Part will explore recent cases in which Article 9 has been applied in the foreclosure context.
Part V will argue that uniform application of the U.C.C. will aid the recovering housing market and provide a predictable framework for foreclosure of mortgage, going forward. Specifically, Part V will argue that the U.C.C. should be applied to determine whether a plaintiff has standing to foreclose and will further argue that courts should utilize Article 3 of the Code in making such determinations.”
Morgan L. Weinstein, The Non-Uniform Commercial Code: The Creeping, Problematic Application of Article 9 to Determine Outcomes in Foreclosure Cases, 14 U.N.H. L. REV. 267 (2016), available at http://scholars.unh.edu/unh_lr/vol14/iss2/2