“We seldom try to understand the meaning of words, we just seem to mouth them and hold them dearly, but seldom attempt to investigate their substantive implications and precise meanings. How easily we are put to sleep by our eyes, even when we are awake” (Robert W. Wangrud).
Though an act in Texas, relating to the foreclosure of property and the authority of a mortgage servicer to administer the foreclosure on behalf of a mortgagee may have been the intentions of the act, was it the private registry parties intent, or was it the Texas legislature's intent?
This page will demonstrate to the reader how the currently enacted chapter 51 of the Texas Property Code violates both the U. S. and Texas Constitutions.
It may also help the reader to understand why the private registry member utilizes summary judgment as its tool of choice?
Electronic commerce is a way of doing business over large electronic networks such as the Internet. Also called e-commerce, electronic commerce greatly facilitates transactions between companies and consumers (B2C), between one company and another (B2B), and between individual consumers (C2C).
The problem with e-Commerce dealing with Real Property
Sec. 192.007. RECORDS OF RELEASES AND OTHER
(a) To release, transfer, assign, or take another action relating to an instrument that is filed, registered, or recorded in the office of the county clerk, a person must file, register, or record another instrument relating to the action in the same manner as the original instrument was required to be filed, registered, or recorded.
(b) An entry, including a marginal entry, may not be made on a previously made record or index to indicate the new action.
Added by Acts 1989, 71st Leg., ch. 1248, Sec. 53, eff. Sept. 1, 1989.
When the private registry conducts an electronic transaction alluding to the transfer of the underlying "secured" debt from one private registry member to another registry member, the registry member would be required to record its position in the chain of title to the previously recorded deed of trust. Instead, the private registry member records it UCC financing statement, which private registry members call "assignment of note and deed of trust" in county public records. This private registry member's act of recordation in public records of a county seemingly bypasses the secretary of state.
e-Commerce using E-SIGN is not real property law.
Utilizing the private electronic registry seemingly violates section 192.007(b) simply because the electronic "assignment" "creates" a new action. Recording a security interest in a transferable record, or "eNote" as registry members call them, is a new action. An Intangible action in e-commerce between an account debtor and a creditor. Nonetheless, E-SIGN allows for conversion of the transferable record to paper, but E-SIGN governs electronic signatures, not negotiable instruments governed by Article 3. A transferable record is not a deed of trust. This raises many questions to the negotiability, and the transfer, of the transferable record once it is converted to paper?
Did the Mississippi Supreme Court say it best in 1992?
"beneficiary of a deed of trust has a security interest and not a lien" - Shutze v. Credithrift, 607 So. 2d 55, 59 n. 2 (Miss. 1992)
Although a "security interest" was created using a deed of trust at origination, an "interest in" used by private registry members contracts such as a deed of trust, reflect transferring a "security interest", in a personal property asset registered in a private registry, which does not reflect transferring a lien. Private electronic registry members record private "security interests" in public records when they should be recorded with the Secretary of State?
Article 9 of the Uniform Commercial Code (“UCC”) will govern creation and enforcement of security interests in most personal property, and this is where the creation of security interests in the intangible assets used as an alleged eNote by private registry members. Somehow, they seem to have tricked the Texas Legislature into adding the creation of a personal property security interest into chapter 51, of the Texas Property code. Doing such allows private registry members to bypass other laws of the state. Doing such converts real property to personal property.
Questions do arise; Does the secured party have a valid security interest in the tangible personal property [promissory note]? Is the secured party’s security interest perfected? What law governs perfection of the personal property?
Section 9-109 of the uniform version of the UCC describes the personal property that is excluded from the scope of Article 9. Real property liens are one of the exclusions.
Foreclosing on tangible assets.
A. Is the loan secured by real property?
1. What law determines whether the deed of trust
or mortgage is adequate to create a security interest in real property
and its priority?
2. What options does the secured party have for foreclosing on the real property?
a. Filing an action for a judicial foreclosure.
b. Conducting a nonjudicial foreclosure.
c. Accepting a deed in lieu of foreclosure.
The real property law of the state in which the real property is located generally governs creation and priority of a security interest in real property, even if the parties choose the law of another state.
Personal Property v. Real Property
This little piggie went to the market....
How Four "Intangible" definitions made their way to real property under the auspice of "rights".
(35) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. "Security interest" includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Chapter 9. "Security interest" does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 2.401, but a buyer may also acquire a "security interest" by complying with Chapter 9. Except as otherwise provided in Section 2.505, the right of a seller or lessor of goods under Chapter 2 or 2A to retain or acquire possession of the goods is not a "security interest," but a seller or lessor may also acquire a "security interest" by complying with Chapter 9. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer under Section 2.401 is limited in effect to a reservation of a "security interest." Whether a transaction in the form of a lease creates a security interest is determined pursuant to Section 1.203.
(42) "General intangible" means any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. The term includes payment intangibles and software.
(55) "Mortgage" means a consensual interest in real property, including fixtures, that secures payment or performance of an obligation.
(62) "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation.
The crime explained
This website was created to explain the largest crime in the history of the United States, even though it is global. No state is immune from this and it is probable that the same type laws were enacted in the several states to allow electronic registry members to violate the law while using the law to support their private transactions. In Texas, it can be found as far back as 2001, and earlier. As it appears in Texas, Chapter 9, Texas Business and Commerce Code was change to allow for the private registry transactions. If you doubt it, look at 9.206, SECURITY INTEREST ARISING IN PURCHASE OR DELIVERY OF FINANCIAL ASSET, through 9.208, ADDITIONAL DUTIES OF SECURED PARTY HAVING CONTROL OF COLLATERAL, and tell me where the "Authoritative Copy" definition is in UCC 9 definitions? Not even in 9.105. The description of Authoritative copy is in E-SIGN, 15 USC 7021. or Texas UETA, section 322.016(c). Nonetheless, the problem with all that is, E-SIGN excludes Chapter 9. You may also notice "securities" mentioned in those sections? What is the private registry all about? Is it not a bankruptcy remote for the securitization market?
Chapter 51, Texas Property Code violates both the U. S. and Texas Constitutions
When the Texas Legislature enacted H.B. 1493, an act relating to the foreclosure of property and the authority of a mortgage servicer to administer the foreclosure on behalf of a mortgagee provided for amending Chapter 51, of the Texas Property Code, by adding Sections 51.0001, 51.0021, 51.0025, 51.0075, and 51.009
In short, as it is currently enacted, Chapter 51, of the Texas property code, provides legislative law that allows parties to violate other law and yet use chapter 51 of the Texas Property Code to protect the unlawful party with the legislative law. And the courts uphold their actions simply because Chapter 51 says so.
Texas Legislature and Texas Courts unknowingly agree?
Due to the amendments in chapter 51, Texas Property code, which allow for phrases like "holder of a security instrument" seemingly prove bifurcation is at play, which many homeowners have attempted to bring to many of the courts attention, yet the courts seem to feel the homeowner's "bifurcation" claim is a bit ludicrous. The Texas property code allows for bifurcation, if you understand the difference between movables and immovable's, yet, private registry members only need to hold a copy of a security instrument instead of an original promissory note secured by a "security interest" created by a deed of trust, as originally noticed in public records. All the claiming holder of the promissory note would need would be endorsments if the note was assigned, transferred, or sold, if it were claiming a "Secured real estate mortgage debt"?
There is no such thing as a "national book entry system".
That is except for the "national book entry system" as defined by the Federal Reserve, or Securities and Exchange Commission. In fact, here is the definition out of the U.S. Government Publishing Office for "book entry system";
"Book-entry System means the automated book-entry system operated by the Federal Reserve Banks acting as the fiscal agent for the Enterprises, on which Book-entry Enterprise Securities are issued, recorded, transferred and maintained in book-entry form. "
The electronic registry used for supposed real estate mortgage loans is not defined in either of the Fed's definitions. So, how did the electronic registry for registering transferable records become known by the word defined in (78R)H.B. 1493? "Book entry system" means a national book entry system for registering...." Was it Stephen C. Porter's idea? BDFE? Were the elected officials misled? Paid off? Why didn't they just use "national book entry system" instead of being so specific, and narrowing it down? Look up the history of (78R)H.B. 1493, you may find Porter was a "witness" in the process of making the intangible part of Chapter 51, of the Texas Property Code. You know, the man from the law firm that just makes documents up? I've previously written about this particular house bill, and the making up of documents, a few years back. I hope you soon wake from your slumber, and understand the illusion you've believed in for so long.
Can't meet the Requirement
Have you realized yet that Morgage Electronic Registration Systems, Inc. does not meet the definition of "national book entry system", in order to be the definition of "book entry system" in section 51.0001(1)?
Here is how; Private registry system items are "assets' of the private registry system member. These "assets" would be governed by the Uniform Commercial Code, whether it be Article 3, governing the transferability of the note, or Article 9, governing the secured transaction. I matters not whether the secured creditor utilized a private registry system for tracking its assets, the Uniform Commercial Code is the governing law of the secured transactions. However, if the secured creditor fails to follow the governing law, it is not the fault of the residential real estate mortgage loan "borrower", commercial real estate mortgage loan "borrower", or a state agency fault. This failure to follow governing law belongs to the secured creditor, its agent's or representatives.
In the Mixitup
To mix up the market, the secured creditor utilizes an electronic registry for commercial transactions. However the electronic registry is designed to meet the guidelines of ESIGN for electronic contracts, and the transfers of electronic contracts. Rather than use the defined terms or definitions of ESIGN, the electronic registry simply uses terms, not definitions, of well known in the uniform commercial code, such as holder, assign, purchaser, seller, security instrument, and such. Terms have even gone as far as alluding that the electronic contract "would be a note under Article 3 of the Uniform Commercial Code if the electronic record were in writing"
Article 3 does not govern electronic records. ESIGN excludes Article 3. ESIGN governs electronic records. That is not to say the private contract between the parties who chose to contract electronically placed a value within the electronic contract. These are private contracts, unrelated to real real estate mortgage loan, they are only references to the existence of a real estate mortgage loan held by a secured creditor originally. Therefore, it should be realized that anything coming out of a private registry system are mere references to an intangible for a creditor and an account debtor. In other words, intangibles. UCC type governed items.
The real estate mortgage loan is not governed by the UCC, though many reference the UCC as guidelines for perfection of the secured debt. ESIGN does not apply to paper promissory notes, nor deed of trusts, nor security instruments. ESIGN does not define any of these. Look for yourself. ESIGN defines "transferable record". ESIGN also defines "holder" in regards to the transferable record, and not a holder in regards to Article 3. If you review the section regarding holder, you should discover a contradiction of law in ESIGN itself? Look at 15 USC 7021(d) "Status of Holder".
(d) Status as holder
Except as otherwise agreed, a person having control of a transferable record is the holder, as defined in section 1–201(20) of the Uniform Commercial Code, of the transferable record and has the same rights and defenses as a holder of an equivalent record or writing under the Uniform Commercial Code, including, if the applicable statutory requirements under section 3–302(a), 9–308, or revised section 9–330 of the Uniform Commercial Code are satisfied, the rights and defenses of a holder in due course or a purchaser, respectively. Delivery, possession, and endorsement are not required to obtain or exercise any of the rights under this subsection.
Of course, this is only a reference type statement, simply because these are supposed secured creditors using the electronic registry for electronic transactions. Whether such reference confuses the masses, Article 9 is excluded from ESIGN.
ESIGN for Dummies
If you have no knowledge of ESIGN, this may appear to be hunky-dory? Think again. If you look at 15 USC 7003, ESIGN provides "specific exceptions". More specifically, look at 15 USC 7003(a)(3). Here is what the law according to ESIGN says;
(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—
(3) the Uniform Commercial Code, as in effect in any State, other than sections 1–107 and 1–206 and Articles 2 and 2A.
When you read 15 USC 7003(a)(3) it clearly states 1-107, and 1-206. ESIGN does not include 1-201. ESIGN also clearly states the Uniform Commercial Code is excluded from ESIGN, except for Article 2, and 2A. ESIGN does not include Article 9. So, why does the law governing the electronic records include Article 9, when the law governing electronic records excludes Article 9? Contradiction?
Nevertheless, Chapter 51 reads something like this;
Sec. 51.0001. DEFINITIONS. In this chapter:
(1) "Book entry system" means a national book entry system for registering a beneficial interest in a security instrument that acts as a nominee for the grantee, beneficiary, owner, or holder of the security instrument and its successors and assigns.
Here is what we understand. The deed of trust was used to register something in the electronic registry. This is described in the registry manuals. In accordance with the electronic registry procedure for the wording in the deed of trust, the electronic registry became the "beneficiary", mortgagee" of a deed of trust for the originator of the real estate mortgage loan. Nonetheless, the beneficiary only has a security interest in the deed of trust, not a lien. Comprende?
Here is what we don't seem to understand? A private, intangible, electronic registry, with private members are being defined into this chapter 51 code. Intangibles are governed by Chapter 9, Texas Business and Commerce Code.
Was this intent of the private registry parties ever disclosed? Nonetheless, because the electronic registry does not track the promissory note, the electronic agency relationship would end for the certain real estate mortgage tangible note and deed of trust when real estate mortgage loan was sold, assigned, or transferred to a subsequent party, even though the registrar still conducts transactions in the electronic registry. This end of agency relationship should have caused the MIN related to the deed of trust to become irrelevant to any future transactions of the MIN. The MIN is of course identified as Mortgage Identification Number, MIN.
Should the secured creditor choose to use the private electronic registry for tracking purposes of a transferable record, whether it be servicing rights in the transferable record, or the beneficial interest in the transferable record, it is still private members agreeing to conduct transactions electronically in an electronic registry that tracks transferable records.
According to Chapter 9, Texas Business and Commerce Code, debtor means;
(28) "Debtor" means:
(A) a person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;
(B) a seller of accounts, chattel paper, payment intangibles, or promissory notes; or
(C) a consignee.
According to Texas Property code, debtor is not defined.
(2) "Debtor's last known address" means:
(B) for a debt other than a debt described by Paragraph (A), the debtor's last known address as shown by the records of the mortgage servicer of the security instrument unless the debtor provided the current mortgage servicer a written change of address before the date the mortgage servicer mailed a notice required by Section 51.002.
Of course, when reading to the end of the subsection, the reader is led to "Sec. 51.002. SALE OF REAL PROPERTY UNDER CONTRACT LIEN". Bingo. You do know there is a rescission section? Sec. 51.016. RESCISSION OF NONJUDICIAL FORECLOSURE SALES
The reasons for addressing this 51.0001(2)(B) subsection is only to draw focus to some wording which, if you understand "intangibles" it becomes clear where the intangible is being used in the property code, "as shown by the records of the mortgage servicer of the security instrument". The mortgage servicer is the servicer of the transferable record, the transferable record is an electronic record governed by ESIGN. Intangibles are governed by Chapter 9, Texas Business and Commerce Code.
Sec. 51.0001(3) "Mortgage servicer" means the last person to whom a mortgagor has been instructed by the current mortgagee to send payments for the debt secured by a security instrument. A mortgagee may be the mortgage servicer.
Misleading? "the last person to whom a mortgagor has been instructed by the current mortgagee"
To pop two birds with one stone, and raise a question about the mortgagee, look at what the courts claim because of the unconstitutional law. How does the court know for fact, MERS members transferred the note? MERS does not track promissory notes. Anyway, the courts state; "MERS as nominee remained the mortgagee of record for as long as the note was transferred between MERS members." - TREVARTHAN v. NATIONSTAR MORTGAGE LLC, Tex: Court of Appeals, 3rd Dist. 2016
So, according to what the courts claim, did the electronic registry fail send out instructions to the mortgagor for notice of "servicer" change notifying the mortgagor as to who to make monthly payments to? Of course not, even though it appears there is a problem with notification of servicer. All of the private registry notices as electronic send/receive. Nevertheless, this example shows how you can see the courts do not understand the electronic registry either. If they do, they turn a blind eye. This is how things can drift off track. In fact, the mortgagor of a transferable record is notified by the mortgagee of the transferable record where to make payment to the new servicer of the transferable record. It is in the electronic tracking agreements. Again intangibles are written within the property code. The mortgagor being an account debtor, the debtor, the mortgagee being the creditor for the transferable record. And the electronic registry is the beneficiary of the transferable record. It is the bankruptcy remote.
(4) "Mortgagee" means:
(A) the grantee, beneficiary, owner, or holder of a security instrument;
(B) a book entry system; or
(C) if the security interest has been assigned of record, the last person to whom the
security interest has been assigned of record.
Here is what we currently understand. "Holder of the security instrument" is not defined. We can also understand grantee, beneficiary are terms used in the past regarding conveyances of land. And we can also understand a security interest can be assigned. However, the security interest must be lawfully assigned before it could be lawfully filed of record. Nonetheless, this does give a good scenario of the "security interest" defined in Article 9?
Why was the "holder of the debt" removed, and "holder of the security instrument" a replacement? Because the holder of the debt is an Article 9 creditor, and the debtor is the Article 9 account debtor. If that were known at the time of the sponsor writing the bill, I doubt Chapter 51 would have been amended the way it was. Much less enacted.
As (C) is vague and ambiguous to the definition of "Mortgagee" simply due to the wording of (C). Private electronic registry contains records in digital format rather than a tangible record. The private registry record can be assigned to any private member of the private registry, yet that does not satisfy age old rituals of recordation by the lawful party whom is purported to be the "secured party", secured creditor of a real property mortgage loan. For the state of Texas to allow the private registry to accomplish its electronic transaction methods rather than real property transactions methods, and use the Chapter 51 to accomplish this has caused severe impairments to many Texas statutes, not just chapter 51. As currently enacted, chapter 51 allows for unlawful recordation's in public records of the county clerks in Texas to be considered eligible, when such private electronic transactions are ineligible.
May, Shall, Must
We must understand an electronic registry is governed by ESIGN and not the property code. Private transactions governed by ESIGN do not require notice, or filing of record in public record. Basically all the amendments to Chapter 51, were to add Article 9 within the property code, to allow private intangibles to be superior to real property.
(5) "Mortgagor" means the grantor of a security instrument.
This is a term used for many years.… Now it is used in electronic contracts.
(6) "Security instrument" means a deed of trust, mortgage, or other contract lien on an interest in real property.
This appears very straightforward in describing security instrument, however, since intangibles were slipped into the property code, "or other contract lien on an interest in real property" does bring a new meaning to the intangible, "interest in", and the Article 9 definition of mortgage into the property code.
(7) "Substitute trustee" means a person appointed by the current mortgagee or mortgage servicer under the terms of the security instrument to exercise the power of sale.
The substitute trustee according to the above definition could be valid, however, if the deed of trust were separated from the note, and only the holder of the security instrument could pursue the unlawful actions according to this portion of Chapter 51, of the Texas Property code, how does ESIGN, the governing law of the alleged holder of the security instrument, support any of chapter 51?
Intangibles are given superiority of real property rights causing an inequality in law in Texas. Inequality in Texas law, posses inequality of constitutional rights. This deprives the rights of the people of Texas.
It is important that all people of Texas, and as fact, the several states, real property laws were "amended" to allow for such conduct the electronic registry members are doing. The courts will not change what the Legislature enacted. Too much work for them?
Here is the difference; We are the constituents of the elected officials. They are supposed to listening to our voices. It is time to change the inequality of law in Texas and elsewhere.
If you are looking for the definition of "assets", you may not find that in Article 9? Nonetheless, you can find it in UCC 6, Bulk Sales.
By allowing the private personal property registry to run amuck, age old case law is being destroyed. Tale for instance Kirby Lumber Corp. v. Williams, out the window, West v. First Baptist Church of Taft, citing Carpenter v. Longan, out the window. All because of a private personal property registry accomplishing what courts of the past said they could not do lawfully. Here are a few excerpts from a power point file from 2012
Make your voice heard.
Sign the petition to remove the "national book entry system" in Texas. MERS impairs contract obligations, among many other Constitutional violations.
QUIZ: Did you know the acronym "MERS" was used by the VA in the 1990's?
Things that make you go hmmm. Did you know MERS was a member of the advisory council of the Federal Reserve in 1997? See page 330.
Click the animated graphic for the main page
Note 101 - How private registry members use Texas real property law to bypass many other U.S. and Texas laws.
Peace be with you,