Wednesday, November 16, 2011

FYI: PEB for UCC Issues Report on UCC Rules Governing Transfer and Enforcement of Notes Secured by Real Property

The Permanent Editorial Board for the Uniform Commercial Code (PEB) issued
the attached Report regarding the statutory background for several key
rules in the UCC that govern the transfer and enforcement of notes secured
by a mortgage on real property.

Specifically, the Report examines the rules relating to four specific

1. Who is the person entitled to enforce a mortgage note and,
correspondingly, to whom is the obligation to pay the note owed?

2. How can the owner of a mortgage note effectively transfer ownership of
that note to another person or effectively use that note as collateral for
an obligation?

3. What is the effect of transfer of an interest in a mortgage note on
the mortgage securing it?

4. May a person to whom an interest in a mortgage note has been
transferred, but who has not taken a recordable assignment of the
mortgage, take steps to become the assignee of record in the real estate
recording system of the mortgage securing the note?

The PEB was established in 1961 by the American Law Institute and the
Uniform Law Commission, which jointly sponsor the Uniform Commercial Code.
One of the charges of the PEB is to issue commentaries "and other
articulations as appropriate to reflect the correct interpretation of the
[Uniform Commercial] Code and issuing the same in a manner and at times
best calculated to advance the uniformity and orderly development of
commercial law."

A draft of the PEB's Report was made available to the public for comment
on March 29, 2011, and the comments were taken into account in preparing
the final Report.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874

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