“Had A Note” 

For those that wish 
to have the Original 
“Have a Note” it is 
Available for Direct 
Download 
From the Following 
Author Approved Sites 
http://www.ourlemon.com/nshan%20fa.pdf 

© Copyright 2010 j.mcguire                     P O Box 1352, Beford, Texas 76095‐1352  Page 1 
 

Page 1 of 37 8/16/10
 Case Closed: eNotes are Not Legal 
 
Incorrect Analysis of eNote Enforceability Nationwide 
 
Mortgage Industry Standards Maintenance Organization (MISMO, a registered service mark 
of  the  Mortgage  Bankers  Association),  Electronic  Signature  Records  Association,  and  the 
American  Land  Title  Association  released  a  White  Paper1  titled  “Case  Closed:  eNotes  Are 
Legal”.  
 
The  White Paper’s  “Disclaimer”  notes  that  “the  authors and  their organizations accept no 
responsibility for errors and omissions”. 
 
The Error:   eNotes are Not Legal 
 
The Omission:   15 USC 7003 
 
“UETA and ESIGN’s approach is noteworthy in that neither statute attempts to insert the 
concept of a transferable record into the UCC. Instead, UETA and ESIGN exclude from their 
scope most of the UCC…” page (3). 
 
The  Conclusion  of  the  White  Paper  incorrectly  states:  “UCC  Article  3  provisions  for 
promissory notes were not designed for use with electronic records. Rather, ESIGN and UETA 
were  enacted  to  create  the  legal  framework  or  a  parallel  structure  for  the  electronic 
equivalent of a paper promissory note, known as a “transferable record”. As a result, an eNote 
that  is  created  stored  and  maintained  as  required  under  ESIGN  and  UETA  is  a  valid, 
enforceable and negotiable debt obligation.” 
 
The White Paper itself states that ESIGN and UETA both exclude the Uniform Commercial 
Code (UCC)– Article 3 – which governs Negotiable Instruments.  The authors  then attempt 
to persuade the reader that ESIGN and UETA provide sufficient governing laws to support 
the  existence  and  the  enforceability  of  an  eNote.  As  ESIGN  and  UETA  both  exclude  UCC 
Article 3 and the UCC was not designed for and currently does not allow for eNotes, eNotes 
lack supporting law to exist.  
 
MISMO’s current day to day operations falls under the MERS umbrella.  
 
E­Notes are “Not Legal” 
 
Under the E­Sign Act or the Uniform Commercial Code 
E­Sign 15 USC 7003 excludes the Uniform Commercial Code Article 3 

1
http://www.mbaa.org/files/ResourceCenter/emortgage/eNoteWhitePaper.pdf
Copyright 2010 by j.mcguire P.O. Box 1352 Bedford, TX 76095-1352 j.mcguire@swbell.net Page 1 of 1

Page 2 of 37 8/16/10
 Legal-Legal-Legal
“E-Notes are Legal”
“No they’re not”
Being young and without wisdom and knowledge many believed the Tooth Fairy and the
Easter Bunny were real. We were told they were real and we believed.

We shall not include Santa Claus as the author still believes in what Santa Claus and
Christmas stands for.
Wisdom and Knowledge
Does the average bank teller have any idea their employer may be a part of the biggest fraud
in history, No.

Does the average real estate broker have any idea the banks they deal with may be a part of
the biggest fraud in history, No.

Does any average person have any idea they may be a part of the biggest fraud in history, No.

Compartmentalization of employees is what has aided in the biggest fraud in history to be

accomplished. Cubicle A, Cubicle B, Cubicle C have all been told their actions that are
preformed are in legal compliance.
They believe.

The front line employee has no idea that their actions aid in perpetuating the biggest fraud in
history. They believe.

My computer says the electronic negotiable note is here so they believe it’s real… No it’s not.

Electronic Negotiable Notes (E-Notes) are legal. No they’re not.

That’s what they want us to believe.

E-Sign 15 USC 7003 excludes Uniform Commercial Code

Article 3 – Negotiable Instruments

So just like with the Tooth Fairy and the Easter Bunny we learn through wisdom and
knowledge that E-Notes are not real. (Lacks supporting laws)

Copyrighted 2010   j.mcguire        P O Box 1352, Bedford, Texas 76096‐1352   j.mcguire@swbell.net   Page 1 

Page 3 of 37 8/16/10
 Non Compliance
UCC Article 3 3-203
Servicer’s Lender 1 Invalid use E-Sign Act
Records Vault Originator
Scan/Copy
Holder of
Paper E-Sign Act
Documents Non-Innocent Purchaser Book Entry
Scan Copy/Electronic
Pooling & Servicing Assignment of Electronic
Agreement Negotiable Instrument

Agent Lender 2
Or Bank
Independent Non Compliance
Contractor
Seller
UCC Article 3 3-203
Securitizer Invalid use E-Sign Act
Direction
&
Control E-Sign Act
Book Entry
Assignment of Electronic
Negotiable Instrument
Lender 3
Transfer Depositor
Of Custodial To
Rights Non Compliance
Trust UCC Article 3 3-203
Invalid use E-Sign Act
Mortgage Loan Pool E-Sign Act
Swap Book Entry
Trust Certificates Assignment of Electronic
Transfer Negotiable Instrument
Of Custodial Lender 4
Rights
Trustee
For the Benefit Non Compliance
UCC Article 3 3-203
Transfer Of the Trust Invalid use E-Sign Act
Of Custodial
Rights E-Sign Act
Book Entry
Assignment of Electronic
Negotiable Instrument

Lender 4
Custodian
For the Benefit
Of the Trust

Invalid use of E-Sign Act - 15 USC 7001

15 USC 7003
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.
Copyright J McGuire 2009 j.mcguire@swbell.net
Page 4 of 37 8/16/10
 Servicer Lender 1 Non Compliance
UCC Article 3 3-203
Records Vault Originator
Scan/Copy
Holder
Paper E-Sign Act
Documents Non-Innocent Purchaser Book Entry
Scan Copy/Electronic
Assignment of Electronic
Fannie Mae Negotiable Instrument
Contractual
Guidelines
Lender 2
Agent
Or Bank
Independent Seller to
Non Compliance
Contractor Fannie Mae UCC Article 3 3-203
Direction
& E-Sign Act
Control Book Entry
Assignment of Electronic
Negotiable Instrument
Lender 3
Transfer Fannie Mae
Of Custodial Securitizer
Rights Non Compliance
Trusts UCC Article 3 3-203

Mortgage Loan Pool E-Sign Act

Swap Book Entry
Trust Certificates Assignment of Electronic
Transfer Negotiable Instrument
Of Custodial Lender 4
Rights
Custodian
For the Benefit
Transfer Of the Trust
Of Custodial
Rights

Single-Family MBS Prospectus

Guaranteed Mortgage Pass-Through Certificates
(Single-Family Residential Mortgage Loans)

Mortgage Pools
We require each mortgage loan to meet our published standards for loans that we purchase, except to the extent
that we have permitted variances from those standards. We may change our standards from time to time.

UCC 3-203
TRANSFER OF INSTRUMENT
RIGHTS ACQUIRED BY TRANSFER
(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the
instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer,
directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.
Page 5 of 37 8/16/10
Paper Note v Electronic Note Negotiation
E-Note Securities Registered
NON-Compliance Electronic Tracking
Uniform Cede & Co., Clearstream,
Commercial
Code Euroclear

Mortgage Backed Securitization

Negotiation by E-Note (Electronic)
Original Lender 1
Promissory Originator
Note Transfer Lender 2 Lender 3 Lender 4
Scan/Copy/
Store
Ownership Seller Depositor Trustee
By E-Note
MBS MBS MBS
Paper Note

Transfers
Servicing Rights

XYZ Ownership
Servicing
Servicer Registered
Update
Vault Document Tracking
Tracking Update
Custodian System
Tracking
Update
ABC Tracking
Servicer
Promissory
Update Notes
Tracking Swapped
Register For
Securities
Electronic Certificates
Tracking

Promissory Notes Homeowner

Held in Trust for Contact
The Benefit of the Limited
Original
Certificateholders To Servicer
Promissory
Lacks Endorsements
Note
Per UCC
Retrieved
Securities
Certificates
Owner
Promissory Notes
Withdraw
Promissory
Note
From Securities
Contractual

Default
Default
Withdrawal
Referred
Per
Law Firm
PSA
Legal Action
Agreement

Evidence
Non-Negotiated Promissory Note
Lost Note Affidavit with
Court
Printed Out Graphic Image

Copyrighted
Page 6 of 37 8/16/10
 Discharge of Debt Obligation
Or
Promissory Security Perpetuates Fraud on Wall Street Discharge Perpetuates
Note Instrument Debt Fraud on
Obligation Wall Street

Contractural
Recordation

Agreement
Servicing
Statutes

Pooling
Obligor
Obligor
Executes
Executes
Security
Promissory
Instrument
Note to
to
Obligee Public Records Rules in Favor
Obligee
Of Obligee
Not Rules in Favor
Recorded In Of Obligor
Public Records
Loan Loan Deed of Trust
Originator Originator Recorded
Obligee 1 Obligee 1 Valid Lien Court
Electronic
Recordation Opinion
MERS
Obligee 1
Obligee 1
Assigns
Assigns
Security
Note
Instrument
To Law Firm
To
Obligee 2
Obligee 2

Seller Seller
Notice of Assignment
Securitizer Securitizer
Transfers Owner Identity
Of Of
Invalid Transfer of Lien
Trust Trust Copies
Validity
Obligee 2 Obligee 2 Promissory Note or Lost Note Affidavit
Security Instrument
Obligee 2 Printed Out Copies
Obligee 2 Promissory Note
Assigns
Assigns Security Instrument
Security
Note
Instrument
To
To
Obligee 3
Obligee 3

Depositor Depositor Notice of Assignment Law Firm

To To Transfers Owner Identity
Trust Trust Invalid Transfer of Lien
Obligee 3 Obligee 3 Validity

Obligee 3
Obligee 3
Assigns
Assigns
Security
Note
Instrument
To
To
Obligee 4
Obligee 4

Bank Bank Bank Bank

Notice of Assignment Notice of Assignment
Trustee Trustee Trustee Trustee
Transfers Owner Identity Transfers Owner Identity
For For For For
Invalid Transfer of Lien Invalid Transfer of Lien
Trust Trust Trust Trust
Validity Validity
Obligee 4 Obligee 4 Obligee 6 Obligee 6

Obligee 4 Obligee 5
Obligee 4 Obligee 5
Assigns Assigns
Assigns Assigns
Security Security
Note Note
Instrument Instrument
To To
To To
Obligee 5 Obligee 6
Obligee 5 Obligee 6

Bank Bank Bank Bank

Notice of Assignment
Custodian Custodian Custodian Custodian
Transfers Owner Identity
For For For For
Invalid Transfer of Lien
Trust Trust Trust Trust
Validity Copyrighted
Obligee 5 Obligee 5 Obligee 5 Obligee 5

Page 7 of 37 8/16/10
 Discharge of Debt Obligation
Or
Promissory Security Discharge Perpetuates
Note Instrument Perpetuates Fraud on Wall Street
Debt Fraud on
Obligation Wall Street

Contractural
Recordation

Agreement
Servicing
Statutes

Pooling
Obligor
Obligor
Executes
Executes
Security
Promissory
Instrument
Note to
to Public Records
Obligee Rules in Favor
Obligee Perfected Lien
Of Obligee
Not Rules in Favor
Recorded In Of Obligor
Public Records
Loan Loan
Originator Originator Deed of Trust Perfected
Obligee 1 Obligee 1 Recorded Lien Electronic Court
Recordation Opinion
MERS
Non-Perfected Lien
Obligee 1
Security Registeration
Assigns
Instrument Foreclosure Foreclosure Tracking
Note
Assignment MERS
To
Obligee 2
Non MOM
Clause
Deed of
Clause
Deed of Court
Trust Trust
(Trigger) (No Trigger) Bank As Trustee
Obligee 6
Seller Seller Registration on MERS Mortgage
Securitizer Securitizer Promissory Note Servicer
Of Of Security Instrument
Trust Trust Invalid Transfer of Lien Copies
Obligee 2 Obligee 2 Invalid Lien Promissory Note or Lost Note Affidavit
Security Instrument

Obligee 2
Unperfected
Assigns Security Instrument
Lien
Note Separated From Note
Unperfected
To Registered E-Registry Printed Out Copies
Lien
Obligee 3 Promissory Note
Security Instrument

Depositor Depositor Notice of Assignment Law Firm

To To Transfers Owner Identity
Trust Trust Invalid Transfer of Lien
Obligee 3 Obligee 3 Invalid Lien Foreclosure
Clause
Unperfected
Deed of
Obligee 3 Lien
Trust
Assigns (No Trigger)
E-Registry
Note
Updated
To Unperfected
Obligee 4 Lien

Bank Bank Bank Bank

Notice of Assignment
Trustee Trustee Trustee Trustee
Transfers Owner Identity
For For Notice of Assignment For For
Invalid Transfer of Lien
Trust Trust Transfers Owner Identity Trust Trust
Invalid Lien
Obligee 4 Obligee 4 Invalid Transfer of Lien Obligee 6 Obligee 6
Invalid Lien
Unperfected
Obligee 4 Lien Obligee 5 Obligee 5
Assigns Assigns Assigns
E-Registry Unperfected Security
Note Note
Updated Lien Instrument
To To
Obligee 5 To Obligee 6
Notice of Assignment
Obligee 6
Transfers Owner Identity
Invalid Transfer of Lien
Bank Bank Invalid Lien Bank Bank
Custodian Custodian Custodian Custodian
For For For For
Trust Trust Copyrighted Trust Trust
Obligee 5 Obligee 5 Obligee 5 Obligee 5

Page 8 of 37 8/16/10
 Discharge of Debt Obligation
Or
Promissory Security Discharge Perpetuates
Note Instrument Perpetuates Fraud on Wall Street
Debt Fraud on
Obligation Wall Street

Contractural
Recordation

Agreement
Servicing
Statutes

Pooling
Obligor
Obligor
Executes
Executes
Security
Promissory
Instrument
Note to Public Records
to
Obligee MERS Rules in Favor
Obligee
Beneficary Of Obligee
Not Rules in Favor
Recorded In Of Obligor
Deed of Trust Public Records
Loan Loan Recorded
Unperfected
Originator Originator Invalid Lien
Lien
Obligee 1 Obligee 1 MERS MOM Electronic Court
Loan Recordation Opinion
MERS
Non-Perfected Lien
Obligee 1
Foreclosure Registeration
Assigns Security Instrument
Clause Tracking
Note Separated From Note
Deed of
To
Obligee 2
Registered E-Registry
Trust Court
(No Trigger)
Bank As Trustee
Obligee 6
Seller Seller Mortgage
Notice of Assignment
Securitizer Securitizer Servicer
Transfers Owner Identity
Of Of
Invalid Transfer of Lien
Trust Trust Copies
Invalid Lien
Obligee 2 Obligee 2 Promissory Note or Lost Note Affidavit
Security Instrument
Foreclosure
Obligee 2
Clause Unperfected
Assigns
E-Registry Deed of Lien
Note
Updated Trust Printed Out Copies
To
(No Trigger) Promissory Note
Obligee 3
Security Instrument

Depositor Depositor Notice of Assignment Law Firm

To To Transfers Owner Identity
Trust Trust Invalid Transfer of Lien
Obligee 3 Obligee 3 Invalid Lien Foreclosure
Clause
Deed of
Obligee 3 Foreclosure Trust
Assigns Clause (No Trigger)
E-Registry
Note Deed of
Updated
To Trust
Obligee 4 (No Trigger)

Bank Bank Bank Bank

Notice of Assignment Notice of Assignment
Trustee Trustee Trustee Trustee
Transfers Owner Identity Transfers Owner Identity
For For For For
Invalid Transfer of Lien Invalid Transfer of Lien
Trust Trust Trust Trust
Invalid Lien Invalid Lien
Obligee 4 Obligee 4 Obligee 6 Obligee 6

Obligee 4 Foreclosure Obligee 5

Assigns Clause Assigns
E-Registry E-Registry
Note Deed of Note
Updated Updated
To Trust To
Obligee 5 (No Trigger) Obligee 6

Bank Bank Bank Bank

Notice of Assignment
Custodian Custodian Custodian Custodian
Transfers Owner Identity
For For For For
Invalid Transfer of Lien
Trust Trust Trust Trust
Invalid Lien
Obligee 5 Obligee 5 Copyrighted Obligee 5 Obligee 5
Page 9 of 37 8/16/10
 Obligor Obligor
Notice of Assignment
Required Assignments Signs
Promissory
Signs
Deed of
From Obligor
To Obligee 1
Note Trust
Enforcement Rights
Holder in Due Course
Obligee 1 Original Recordation
Takes Obligee 1 Public Land
Yes Possession No Maintains Records Office
Negotiable Possession Creates
Instrument Promissory Note Valid Lien

Negotiation Requires
Compliance with
Uniform Commercial
Code Article 3 Maintains
Servicing
Obligee 1 Recordation &
Assigns Note Public Land Collection
Notice of Assignment
To Records Office
Obligee 1 to Securitizer
Obligee 2 Transfers
(Securitizer) Valid Lien
Release of Lien
Filed with Public Land
Assignment Records Office
Returns Note
Upon Full
Securitizer Recordation
Payment
Assigns Note Public Land
Notice of Assignment
To Records Office
Securitizer to Depositor
Obligee 3 Transfers
(Depositor) Valid Lien

Assignment

Recordation
Depositor
Public Land Recordation
Assigns Note Notice of Assignment Substitute Trustee
Records Office Public Land
To Depositor to Trustee Sale Recorded
Transfers Records Office
Trustee for Trust
Valid Lien

Assignment

Recordation
Trustee Trustee
Public Land
Assigns Note Notice of Assignment Sale 3rd Party Purchase
Records Office
To Trustee to Trust (MBS) REO Property
Transfers
Trust (MBS)
Valid Lien

Assignment

Recordation
Trust (MBS) Non-Judicial
Public Land
Assigns Note Notice of Assignment Foreclosure
Records Office
To Trustee to Trust (MBS)
Transfers
Trustee
Valid Lien

Temporary Transfer of Note

Holder
Law Firm Holder in Due Course Deed of Trust
Rights to Enforce

Copyrighted

Page 10 of 37 8/16/10
Actual Assignments
Obligor Obligor
Notice of Assignment
Signs Signs
From Obligor
Promissory Deed of
To Obligee 1
Note Trust

Obligee 1 Original Recordation

Takes Obligee 1 Public Land
Yes Possession No Maintains Records Office
Negotiable Possession Creates
Instrument Promissory Note Valid Lien

Negotiation Requires
Compliance with
Uniform Commercial
Code Article 3

Obligee 1 Recordation
Assigns Note Notice of Assignment Public Land
To Obligee 1 to Trustee Records Office
Trustee Invalid Filing

Recordation
Substitute Trustee
Public Land
Sale Recorded
Records Office

Temporary Transfer of Note

Trustee
Sale 3rd Party Purchase
REO Property

Non-Judicial
Foreclosure

Lacks Holder
Law Firm Holder in Due Course Deed of Trust
Rights to Enforce

Copyrighted

Page 11 of 37 8/16/10
 9-10-2009 JM

Promissory
Required Assignments Note
Deed of
Trust
Notice of Assignment
Deed of Trust
WAMU
To Maintain Holder in Due Course
And Rights to Enforce
WAMU
Takes
Possession
Negotiable Recordation
Instrument Public Land
Records Office
Creates
Holder in Due Valid Lien
Course

WAMU Recordation
Assigns Note Public Land
Notice of Assignment
To Records Office Recordation
WAMU to Securitizer
(Securitizer) Transfers Public Land
Unknown Maintains Valid Lien Records Office

UCC Assignment

Securitizer Recordation
Assigns Note Public Land
Notice of Assignment Substitute Trustee
To Records Office
Securitizer to Depositor Sale Recorded
(Depositor) Transfers
Unknown Maintains Valid Lien

UCC Assignment

Trustee
Recordation Sale
Depositor
12 USC Public Land
Assigns Note Notice of Assignment
1821 (d) (2) (A) (i) Records Office
To Depositor to Trustee
Transfers
Trustee for Trust
Maintains Valid Lien
Update Public Land
Records Office to
UCC Assignment Maintain Valid Lien
Texas Property Code
11.001-12.001-13.001 Non-Judicial
Recordation Foreclosure
Trustee
Public Land
Assigns Note Notice of Assignment
Records Office
To Trustee to Trust (MBS)
Transfers
Trust (MBS)
Maintains Valid Lien

Deed of Trust
Foreclosure Clause
FDIC Notice of Assignment Upon Default of
Receivership Trust (MBS) to Trustee Debt Obligation

12 USC 1821 (d) (2) (A) (i)

Trust (MBS)
Trigger
Assigns Note
JP Morgan Chase Foreclosure
UCC Assignment To
Trustee Clause in
JP Morgan Chase
Deed of Trust
Trustee

TITLE 12 > CHAPTER 16 > § 1821 (d) Powers and duties of Corporation as conservator or receiver
(2) General powers (A) Successor to institution The Corporation shall, as conservator or receiver, and by operation of law, succeed to—
(i) all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder,
depositor, officer, or director of such institution with respect to the institution and the assets of the institution; and (ii) title to the books,
records, and assets of any previous conservator or other legal custodian of such institution.
Copyrighted
Page 12 of 37 8/16/10
 9-10-2009 JM

Actual Assignments Promissory

Note
Deed of
Trust

“NO” Holder in Due Course

“NO” Rights to Enforce Assignment
Deed of Trust
WAMU Recorded
Takes
Possession
Negotiable Recordation
Instrument Public Land
Records Office
Creates
Holder in Due Valid Lien
Course

WAMU Recordation
Assigns Note Public Land
Notice of Assignment
To Records Office Recordation
WAMU to Securitizer
(Securitizer) Transfers Public Land
Unknown (Not Recorded) Records Office

Assignment

Securitizer Recordation
Assigns Note To Public Land
Notice of Assignment Substitute Trustee
(Depositor) Records Office
Securitizer to Depositor Sale Recorded
Non Holder in Due Transfers
Course (Not Recorded)

Assignment

Trustee
Depositor Recordation Sale
12 USC Assigns Note To Public Land
Notice of Assignment
1821 (d) (2) (A) (i) Trustee for Trust Records Office
Depositor to Trustee
Non Holder in Due Transfers
Course (Not Recorded) Update Public Land
Records Office to
Maintain Valid Lien
Assignment Texas Property Code
11.001-12.001-13.001
Trustee Non Compliance Non-Judicial
Recordation Foreclosure
Assigns Note
Public Land
To Notice of Assignment
Records Office
Trust (MBS) Trustee to Trust (MBS)
Transfers
Non Holder in Due
(Not Recorded)
Course

Deed of Trust
FDIC Foreclosure Clause
Receivership Notice of Assignment Upon Default of
Non Holder in Due Trust (MBS) to Trustee Debt Obligation
Course

12 USC 1821 (d) (2) (A) (i)

Trust (MBS)
Assigns Note To Trigger
JP Morgan Chase JP Morgan Chase Foreclosure
Assignment
Trustee Trustee Clause in
Non Holder in Due Deed of Trust
Course

TITLE 12 > CHAPTER 16 > § 1821 (d) Powers and duties of Corporation as conservator or receiver
(2) General powers (A) Successor to institution The Corporation shall, as conservator or receiver, and by operation of law, succeed to—
(i) all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder,
depositor, officer, or director of such institution with respect to the institution and the assets of the institution; and (ii) title to the books,
records, and assets of any previous conservator or other legal custodian of such institution.

Page 13 of 37 Copyrighted
8/16/10
 Bank XXX as Trustee for ZZZ Trust

Lender 2 Bank Bank Bank

Lender 3
Lender 1 (Seller As As As
Obligor Originator
Note
Securitized
Note (Depositor Note
Trustee
Note
Custodian
Note
Trustee
Trust)
Trust) (Trust) (Trust) (Trust)
Trustee Custodian Trustee
Owner
Owner of Note Owner of Note Holder of Note Holder of Note Holder of Note
Holder
Holder of Note Holder of Note Trust Trust Trust
Negotiable
Per PSA Per PSA Owner of Note Owner of Note Owner of Note
Instrument
Per PSA Per PSA Per PSA

Note
Promissory UCC
MERS
Article 3 Swap
Note Registered Negotiable Assignee Assignee Assignee
Identity Instruments
Legal
Deed Assignor Assignor Assignor
Deed of Trust Certificates Action
UCC
MOM
Article 9
Loan

(MERS) (MERS) (MERS) (MERS)

Public MERS
Mortgage
Electronic
Mortgage
Electronic
Mortgage
Electronic
Mortgage
Electronic
Law firm
Litigation
Records Registration Registration Registration Registration
System System System System

Recorded Public Records

Fraudulent Filing
Not Recorded
Copyrighted

Public Records
Not Recorded
Public Records

Not Recorded
Public Records

Lender 2 Bank Bank Bank

Lender 3
Not Recorded (Seller As As As
Public Records
(Depositor
Securitized Trustee Custodian Trustee
Trust)
Trust) (Trust) (Trust) (Trust)

Page 14 of 37 8/16/10
 Bank XXX as Trustee for ZZZ Trust

Lender 2 Bank Bank Bank

Lender 3
Lender 1 (Seller As As As
Obligor Originator
Note
Securitized
Note (Depositor Note
Trustee
Note
Custodian
Note
Trustee
Trust)
Trust) (Trust) (Trust) (Trust)
Trustee Custodian Trustee
Owner Owner of Note Owner of Note
Holder of Note Holder of Note Holder of Note
Holder Holder of Note Holder of Note
Trust Trust Trust
Negotiable
Owner of Note Owner of Note Owner of Note
Instrument Per PSA Per PSA
Per PSA Per PSA Per PSA

Note
Promissory UCC
MERS Swap
Note Article 3
Registered Negotiable Assignee Assignee Assignee
Identity Instruments
Legal
Deed Assignor Assignor Assignor
Deed of Trust Certificates Action
UCC
MOM
Article 9
Loan

(MERS) (MERS) (MERS) (MERS)

Public MERS
Mortgage
Electronic
Mortgage
Electronic
Mortgage
Electronic
Mortgage
Electronic
Law firm
Litigation
Records Registration Registration Registration Registration
System System System System

MERS for Lenders and Assigns (Non Holder or Owner of the “Note”)

Recorded Public Records

Fraudulent Filing
Not Recorded
Copyrighted

Public Records
Not Recorded
Public Records

Not Recorded
Public Records

Lender 2 Bank Bank Bank

Lender 3
Not Recorded (Seller As As As
Public Records
(Depositor
Securitized Trustee Custodian Trustee
Trust)
Trust) (Trust) (Trust) (Trust)

Page 15 of 37 8/16/10
 Obligor
Names Are Not Included to Protect the Innocent

Actual Required
Assignments Assignments

First Horizon Home Loan First Horizon Home Loan

Corporation Corporation

General Warranty Deed General Warranty Deed Valid

Lien

Assignment Assignment
Recorded in Recorded in
Actual UCC Assignment UCC Assignment
Public Land Public Land
Records Records
Assignment Assignment
First Horizon Home Loan First Horizon Home Loan
to to
Novastar Mortgage, Inc. Invalid
Novastar Mortgage, Inc. Lien
7/29/2005
Invalid Assignment
Assignment Non Executed Not
Actual
Recorded in UCC Assignment Recorded in
Non Valid
Public Land Public Land
UCC Assignment
Records Records
Novastar Mortgage, Inc.
To Securitizer if not Invalid
Assignment Novastar Lien
Novstar Mortgage, INC by
Saxon Mortgage by Attorney in Assignment
Fact Non Executed Not
To Recorded in
UCC Assignment
Bank of New York Mellon
Public Land
As successor Trustee
Novastar Mortgage Funding Records
Securitizer
Trust Series 2005-1 To Depositor
Per Pooling and Servicing Invalid
Agreement Lien
Assignment
Non Executed Not
UCC Assignment Recorded in
Public Land
Records
Depositor
Invalid
To BNYM as Trustee
Lien
Assignment
Not
Jurisdiction of the Court Non Executed
Recorded in
UCC Assignment
Public Land
Records
BNYM as Trustee
To Certificate Holders
Invalid
Per Pooling and Servicing
Lien
Agreement
Default Assignment
Of Note Not
Non Executed
Recorded in
UCC Assignment
Public Land
Law Firm Takes Records
Certificate Holders
Temporary Custody
To BNYM as Trustee
Holder
Per Pooling and Servicing
Holder in Due Course/Right of
Agreement
Enforcement
Copyrighted
Page 16 of 37 8/16/10
 NUMBER 13-04-135-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
Issue of Instrument Originator CORPUS CHRISTI B EDINBURG
FIRST NATIONAL ACCEPTANCE COMPANY,
Promissory Note (Lender 1) Appellant,
v.
UCC 3-105 Obligor DEOLA BISHOP,
Appellee.
Homeowner On appeal from the 357th District Court
of Cameron County, Texas.
OPINION
Before Chief Justice Valdez and Justices Hinojosa and Yanez

Transfer of Instrument
UCC 3-203

UCC 3-203
Lender 2 TRANSFER OF INSTRUMENT
(Seller) RIGHTS ACQUIRED BY TRANSFER
To FNMA)
(b) Transfer of an instrument, whether or not
the transfer is a negotiation, vests in the
Transfer of Instrument transferee any right of the transferor to enforce
UCC 3-203 the instrument, including any right as a holder
in due course, but the transferee cannot
acquire rights of a holder in due course by a
Mortgage Lender 3 transfer, directly or indirectly, from a holder
in due course if the transferee engaged in
Servicer (FNMA) fraud or illegality affecting the instrument.

Notice
Acceleration
Transfer of Instrument
Default
UCC 3-203
Contractual Parties
Fannie Mae Guidelines
Lender 4
Non-Compliant
MBS Documents
Collateral

Notice
Acceleration
Default

Notice
Non-Judicial Judicial Law
Alleged
Foreclosure
Default Action Firm
Obligor

Copyrighted
Page 17 of 37 8/16/10
 NUMBER 13-04-135-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
Issue of Instrument Originator CORPUS CHRISTI B EDINBURG
FIRST NATIONAL ACCEPTANCE COMPANY,
Promissory Note (Lender 1) Appellant,
v.
UCC 3-105 Obligor DEOLA BISHOP,
Appellee.
Homeowner On appeal from the 357th District Court
of Cameron County, Texas.
OPINION
Before Chief Justice Valdez and Justices Hinojosa and Yanez

Transfer of Instrument
UCC 3-203

UCC 3-203
Lender 2 TRANSFER OF INSTRUMENT
RIGHTS ACQUIRED BY TRANSFER
(Securitizer)
(b) Transfer of an instrument, whether or not
the transfer is a negotiation, vests in the
Transfer of Instrument transferee any right of the transferor to enforce
UCC 3-203 the instrument, including any right as a holder
in due course, but the transferee cannot
acquire rights of a holder in due course by a
Mortgage Lender 3 transfer, directly or indirectly, from a holder
in due course if the transferee engaged in
Servicer (Depositor) fraud or illegality affecting the instrument.

Transfer of Instrument
UCC 3-203
Contractual Parties
Notice
Acceleration
Pooling & Servicing Agreement
Default

Lender 4 Non-Compliant
(Trustee) Documents

Notice
Acceleration
Default

Notice
Non-Judicial Judicial Law
Alleged
Foreclosure
Default Action Firm
Obligor

Copyrighted
Page 18 of 37 8/16/10
Copyrighted

Recordation

Promissory
UCC Statutes
Security
UCC
Public
Note Article Records Instrument Article
3 9
Recordin
g
Note’s Obligor
Obligor Security Instrument Executes Statutes
Executes Perfected Lien Security
Promissory Instrument
Note to to
Obligee Obligee
Deed of Trust
Recorded

Loan Loan
Originator Originator
Obligee 1 Contractual Obligee 1
Scanned
HIDC Pooling
Note Scanned
Not Valid Servicing Notice Of
Security
Assignment UCC Agreement Assigned Lien
Instrument
Of Holder
Note

Securities

Electronic Graphic Image

Seller
Seller
Paper Document Securitizer
Securitizer
Of
Of
Trust
Trust Electronic Conversion Obligee 2
Obligee 2
Paper to Electronic
E-Sign/UETA
Obligee 2 Negotiable Instrument
Security Instrument
Assigns Governed By UCC Art 3 Separated From Note
Note
Excluded in E-Sign/UETA Registered E-Registry
To
Obligee 3 Security Instrument
Allowable
Depositor
Depositor
To
To
Trust
Trust
Obligee 3
Obligee 3
E-Registry E-Registry
Update Updated
Obligee 3 Electronic
Assigns Registration E-Registry
Note MERS Updated
To Non-Perfected Lien
Assignment
Obligee 4
Of
Note
Registry Bank
Bank Update Trustee
Trustee
Assignment For
For
Of Trust
Trust
Note Obligee 4
Obligee 4
Registry
Update

Obligee 4
Assigns E-Registry
Note Assignment Updated
To Of Mortgage
Obligee 5 Note
Registry Servicer
Update
Bank
Bank
False Custodian
Custodian
Verification For
For Assignment
Trust
Trust Of
Obligee 5
Obligee 5 Note
Registry
Update Obilgor
Obligee 4
Assigns
Courts E-Registry
Note Verification Updated
To Computer
Obligee 5 Generated
Data Default
Obligee Bank
Bank Affidavits Trustee
Trustee
For Non Compliance Based On For
Recordation Review Trust
Trust
Contractual Obligee 6
Obligee 6
Pooling
Electronic
Servicing Records
Agreement

Page 19 of 37 8/16/10
 “AGNON / DO­DID” 
From the End to the Beginning 
 
By J. McGuire 
 
Closing

• We begin with the loan originator immediately after closing. The loan originator has taken
possession of many documents of which only three (3) are required to be followed through to
the securitization process. These three (3) documents are the “Warranty Deed,” the Paper
Promissory Note and the Paper Security Instrument (Mortgage, Deed of Trust, Security
Deed).

• The Warranty Deed contains the information that transfers the Title of the property from the
seller to the buyer (Homeowner). Title to the property is required to offer the property as
security in the security instrument as collateral for the paper promissory note. The Warranty
Deed is required to be filed in Public Records. The Warranty Deed is not governed under the
Uniform Commercial Code or states’ equivalence and would be allowable under “eSign” to be
filed in electronic form.

• The Paper Promissory Note: “a writing” in tangible form identifying an indebtedness

governed by the Uniform Commercial Code or the states equivalence identifying the obligor
and obligee. If the Paper Promissory Note is to be a “Secured” indebtedness, the Security
Instrument is also identified within the Paper Promissory Note. The Paper Promissory Note is
governed by the Uniform Commercial Code Article 3 or the states’ equivalence, and “eSign”-
-15 USC 7003—which clearly excludes items governed by the Uniform Commercial Code
Article 3 or the states equivalence and as such the indebtedness can be only in paper tangible
form.

• The Security Instrument: if to be governed by the Uniform Commercial Code or the states
equivalence, the Security Instrument needs to be “a writing” in tangible form. If the Security
Instrument is to be governed by the Uniform Commercial Code Article 9 or the states
equivalence and “eSign”, 15 USC 7003 clearly excludes items governed by the Uniform
Commercial Code Article 9 or the states equivalence then such security instrument can only
be in paper tangible form.

• The Paper Promissory Note and the Security Instrument as combined and offered is a tangible
interest in “Real Property.”
Step X – Scanning, Storage, Destruction and Filing

• The Paper Promissory Note and the Security Instrument are scanned into an electronic
digitized graphic package and at the same time the data from both sets of documents is
scraped of data and this data is placed into an electronic data file and combined with the
electronic version of the promissory note and security instrument along with all other closing
documents which then is identified as the “Mortgage Loan Package”.

• This “Mortgage Loan Package” would be an intangible interest in “Personal Property,” if it

were fully supported by law.

• As future legal actions were unanticipated, the paper documents were either placed in storage,
(Custodial and Non-Custodial Custody) or deliberately destroyed.

©2010  j.mcguire                          P O Box 1352, Bedford, Texas, USA 76095‐1352  Page 1 
 

Page 20 of 37 8/16/10
 • The “Electronic Digitized Mortgage Loan File” is now falsely represented as the legal
“Mortgage Loan Package.

• The electronic version of the Warranty Deed is electronically filed in Public Records; as this
Warranty Deed is allowed to be in electronic form under “eSign,” the filing in Public Records
is a lawful action.

• The electronic version of the Security Instrument is electronically filed in Public Records. If
the obligee attempts to apply UCC laws of perfection to support legal claims within the
security instrument then this filing would be unlawful. If the obligee uses the laws of local
jurisdiction to support perfection the filing would be lawful.

o (Reader Note: Perfection of the Lien and Perfection for Priority are “not” one in the
same.)

• If MERS is involved, registration on the MERS system is required, and when this registration
occurs, an 18 digit Mortgage Identification Number “MIN” is created. The first seven (7)
digits identify the registering lender and the last digit is a checksum number.
The Paper Sale (In this New World of Electronic Securitization does not occur)

• The “Loan Originator,” (Assignor), offers the paper loan package under cover of a Bailee’s
Letter to a perspective buyer. The recipient, (Assignee), of the Bailee’s Letter then must either
accept the offering and tender funds and takes possession of the loan package, or refuse the
offering in which case the Assignor retains ownership of the loan package.
(Note: the Assignor could make the Note payable in blank and upon the Assignee’s accepting
the Note the Assignee could fill in the blank assignment on the Note which would complete the
negotiation.)

• Assignee, upon acceptance of the paper loan package, would file a “Notice of Assignment” in
Public Records to show the negotiation of the Paper Promissory Note, thereby transferring
perfected lien rights from the Assignor to the Assignee, and as such a continuous perfection of
lien rights is maintained. Failure to file this financing statement (Notice of Assignment)
would allow the perfection of the lien to expire and thus render the Security Instrument to a
“Nullity.”

The First Electronic Sale/Assignment (Investment Vehicle as Example, Fannie/Freddie Similar)

• The “Loan Originator,” (Assignor), offers the electronic loan package to a perspective buyer
or a prearranged line of credit lender. The Recipient, (Assignee, Seller/Securitizer of the
Investment Vehicle), of the electronic loan package then must either accept the offering and
tender funds and takes control of the electronic loan package, or refuse the offering in which
case the Assignor retains control of the electronic loan package.
o (Note: as the electronic loan package is registered in the MERS Registry, there is no
physical transfer of the electronic loan package. The MERS Registry is updated as to
who has control and ownership rights of the electronic digitized file of the non-lawful
and intangible form of the electronic promissory note {eNote}.)

• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records
as such a filing would be unlawful as there is no law that supports an electronic negotiation of
an electronic promissory note (eNote).

©2010  j.mcguire                          P O Box 1352, Bedford, Texas, USA 76095‐1352  Page 2 
 

Page 21 of 37 8/16/10
The Second Electronic Sale/Assignment

• The “Seller/Securitizer of the Investment Vehicle,” (Assignor), sells/assigns the electronic

loan package to the buyer, (Depositor of the Investment Vehicle). The recipient, (Assignee,
Depositor of the Investment Vehicle), of the electronic loan package under the terms of the
trust accepts the transfer and takes control of the electronic loan package.
o (Note: as the electronic loan package is registered in the MERS Registry, there is no
physical transfer of the electronic loan package. The MERS Registry is updated as to
who has control and ownership rights of the electronic digitized file of the non-lawful
and intangible form of the electronic promissory note {eNote}.)

• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records
as such a filing would be unlawful as there is no law that supports an electronic negotiation of
an electronic promissory note (eNote).
o (The author has noted several Qui Tam suits being filed claiming the local
governments have been defrauded by the failure to file these assignments and tender
funds into public records. The suits making these charges are without merit.)
o (It is not uncommon to find in Public Records a “Notice of Assignment” filed
reflecting a transfer of lien rights from the Original Assignor to a 3rd subsequent
Assignee(Trustee or Mortgage Servicer). In this scenario the perfection of lien rights
“Perfected Chain of Title” does not match the match the “Chain of Negotiation” of
the Paper Promissory Note, and, as such, proves the Paper Promissory Note and the
Security Instrument are now bifurcated, which renders the Security Instrument a
“Nullity.” These filings in public records are fraud upon public records.)

The Third Electronic Sale/Assignment

• The “Depositor of the Investment Vehicle,” (Assignor), sells/assigns the electronic loan
package to the (Trustee of the Investment Vehicle). The recipient, (Assignee, Depositor of the
Investment Vehicle), then takes control of the electronic loan package. The “Depositor of the
Investment Vehicle,” in compliance with the Investment Trust’s documents, takes control of
the Investment Trust’s Electronic Certificates in exchange for selling/assigning the electronic
loan package to the Trustee of the Investment Vehicle for the benefit of the Certificateholders
(The Swap).
o (Note: as the electronic loan package is registered in the MERS Registry, there is no
physical transfer of the electronic loan package. The MERS Registry is updated as to
who has control and ownership rights of the electronic digitized file of the non-lawful
and intangible form of the electronic promissory note {eNote}.)

• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records
as such a filing would be unlawful as there is no law that supports an electronic negotiation of
an electronic promissory note (eNote).
The Fourth Electronic Sale/Assignment

• The “Trustee of the Investment Vehicle,” (Assignor), sells/assigns the electronic loan package
to the (Custodian of the Investment Vehicle for the benefit of the Certificateholders). The
Recipient, (Assignee, Custodian of the Investment Vehicle for the benefit of the
Certificateholders), takes control of the electronic loan package.

• The “Depositor of the Investment Vehicle,” in compliance with the Investment Trust
documents, takes control of the Investment Trust’s Certificates, in exchange for
selling/assigning the electronic loan package to the Trustee of the Investment Vehicle for the
benefit of the Certificateholders who then are in control of the electronic mortgage package.

©2010  j.mcguire                          P O Box 1352, Bedford, Texas, USA 76095‐1352  Page 3 
 

Page 22 of 37 8/16/10
 o (Note: as the electronic loan package is registered in the MERS Registry, there is no
physical transfer of the electronic loan package. The MERS Registry is updated as to
who has control and ownership rights of the electronic digitized file of the non-lawful
and intangible form of the electronic promissory note {eNote}.)

• “Notice of Assignment” reflecting this “electronic negotiation” is not filed in Public Records
as such a filing would be unlawful as there is no law that supports an electronic negotiation of
an electronic promissory note (eNote).

Non Holder in Due Course Alleges Default (Trustee/Mortgage Servicer)

• “Trustee of the Investment Vehicle/Mortgage Servicer” declares default:
• Numerous actions of fraud are readily identifiable.

• As noted in the four (4) electronic negotiations of the electronic loan package to
securitization, there is a lack of supporting law to allow electronic negotiation. Only the
Holder of the “Paper Promissory Note” entitled in the indebtedness has a right to collect
payments.

• Lost Note Affidavits based on Electronic Records are Hearsay

• Introduction of fraud into the Securities Market

• Fraudulent creation of assignments in attempt to transfer lien rights from Originator to 3rd or
4th subsequent purchaser bypassing 1st and 2nd purchasers resulting in fraudulent filing in
public records.

• Many more.

©2010  j.mcguire                          P O Box 1352, Bedford, Texas, USA 76095‐1352  Page 4 
 

Page 23 of 37 8/16/10
 Loan
Originator

Under
Step X
Banks
Unlawful
Electronic Scan
Custodian
Control
Copy
Conversion Destroy
Vault

Investment To Non-Perfected
Lien
Creation Fee Law
Seller Firm MERS
Investment Trust Nominee/Beneficiary

Unlawful
MERS
Electronic
Negotiation Registry

Depositor Public
Investment Trust Records

Unlawful
Electronic
Negotiation

Trustee Trustee Master

Investment Trust Investment Trust Servicer
Unlawful Sub
Electronic Servicer
Negotiation
Disbursement
Fees
Custodian
Investment Trust Misc
Fees
Certificates

Borrower
Special
Investor Servicer
Legal
Law Firm
Fees

Copyright 2010 j.mcguire P O Box 1352, Bedford, Texas 76095-1352

Page 24 of 37 8/16/10
 Warranty Deed Warranty Deed
Title To Property Title To Property

Promissory Note Promissory Note

Paper Indebtedness Indebtedness

Security Instrument Security Instrument

Paper Deed of Trust-Mortgage-Security Deed Deed of Trust-Mortgage-Security Deed

Paper Documents Step x

MERS Registry
Vaulted with Tracks Alleged
Custodian or Scan
Ownership
Destroyed Copy
Electronic Data
Notice of Assignment of
Lien Rights Filed Public
Electronic Note Electronic
Records for Perfection
Reflects Negotiation of the Security Instrument Electronic
Paper Note

Promissory Note Seller/Securitizer

Electronic Note Unlawful
Indebtedness Investment Vehicle
Paper Electronic
Security Instrument Special Purpose Vehicle Security Instrument Negotiation
Deed of Trust-Mortgage-Security Deed Investment Trust

Promissory Note Depositor

Electronic Note Unlawful
Indebtedness Investment Vehicle
Paper Electronic
Security Instrument Special Purpose Vehicle Security Instrument Negotiation
Deed of Trust-Mortgage-Security Deed Investment Trust

Promissory Note Trustee

Electronic Note Unlawful
Indebtedness Investment Vehicle
Paper Electronic
Security Instrument Special Purpose Vehicle Security Instrument Negotiation
Deed of Trust-Mortgage-Security Deed Investment Trust

Promissory Note Custodian (Certificateholders)

Electronic Note Unlawful
Indebtedness Investment Vehicle
Paper Electronic
Security Instrument Special Purpose Vehicle Security Instrument Negotiation
Deed of Trust-Mortgage-Security Deed Investment Trust

Paper
Documents
Retrieved
House House From
Perfected Lien Non-Perfected
Lien
Original
Law Firm Custodian
Transferred
Theft to Law Firm
REO
Property
Of House
By Bank

Page
© Copyrighted 2010 25 of P37O Box 1352, Bedford,
j.mcguire 8/16/10 Texas, 76095-1352
 Fannie Mae/Freddie Mac
Warranty Deed Warranty Deed
Title To Property Loan Originator Title To Property

Promissory Note Promissory Note

Paper Indebtedness Indebtedness

Security Instrument Security Instrument

Paper Deed of Trust-Mortgage-Security Deed Deed of Trust-Mortgage-Security Deed

Paper Documents Step x

MERS Registry
Vaulted with Tracks Alleged
Custodian or Scan
Ownership
Destroyed Copy
Electronic Data
Notice of Assignment of
Lien Rights Filed Public
Electronic Note Electronic
Records for Perfection
Reflects Negotiation of the Security Instrument Electronic
Paper Note

Promissory Note
3rd Party Purchaser Electronic Note Unlawful
Indebtedness
Paper Bank Electronic
Security Instrument
Deed of Trust-Mortgage-Security Deed
Warehouse Lender Security Instrument Negotiation

Promissory Note
Electronic Note Unlawful
Indebtedness Fannie Mae
Paper Electronic
Security Instrument Freddie Mac
Deed of Trust-Mortgage-Security Deed
Security Instrument Negotiation

Promissory Note Mortgage Backed Security

Electronic Note Unlawful
Indebtedness Principal Only Split
Paper Electronic
Security Instrument Interest Only Split Security Instrument Negotiation
Deed of Trust-Mortgage-Security Deed (Non-Tranche Splits)

Promissory Note
Electronic Note Unlawful
Indebtedness Custodian (Certificateholders)
Paper Electronic
Security Instrument Mortgage Backed Securities
Deed of Trust-Mortgage-Security Deed
Security Instrument Negotiation

Paper
Documents
Retrieved
House House From
Perfected Lien Non-Perfected
Lien
Original
Law Firm Custodian
Transferred
Theft to Law Firm
REO
Property
Of House
By Bank

Page
© Copyrighted 2010 26 of P37O Box 1352, Bedford,
j.mcguire 8/16/10 Texas, 76095-1352
 (Lop Sided)
Courts

Lie, Lie & Lie

To WIN!!!
Paper Documents Retrieved
Lacks Proper Indorsements
Continuous Lien Perfection
Alleged Default
Public Records
Law Firm HIDC Equitable Action on Note
Security Instrument - Nullity
(Money Judgment – No Power of Sale Clause)

MERS – Registry
Beneficial Ownership Electronic Update

Assignment E-NOTE Beneficial

Custodian - Investment Vehicle Ownership
Benefit Certficateholders Assigned

MERS – Registry
Beneficial Ownership Electronic Update

Beneficial
Assignment E-NOTE
Ownership
Trustee - Investment Vehicle Assigned

MERS – Registry
Beneficial Ownership Electronic Update

Beneficial
Assignment E-NOTE
Ownership
Depositor - Investment Vehicle Assigned

MERS – Registry
Beneficial Ownership Electronic Update

Beneficial Beneficial
Assignment E-NOTE
Ownership Ownership
Updated Seller/Securitizer - Investment Vehicle Assigned

MERS Vault-Destroy Paper

Registry Paper Note Custodian

Paper Never Moves

In Lieu Loan Originator Creates E-NOTE No Bailee’s Letters

Public Records Promissory Note LENDER

Perfection (MERS) Security Instrument Holder in Due Course

Bifurcation

© 2010 j.mcguire Page 27 of 37 8/16/10

 “Buyer in ordinary course of business” 
Uniform Commercial Code 
 
The author’s favorite:  "Buyer in ordinary course of business" means a person that buys goods in good 
faith,..”  Better  polish  your  boots  on  this  one.  The  banks  are  not  the  purchaser;  the  newly  created 
Investment Trust Vehicle was the purchaser. The banks only operate as underwriters, trustees and 
servicers of these newly created Investment Trust Vehicles. 
 
PART 1. GENERAL PROVISIONS 

§ 1­102. Scope of Article 

This article applies to a transaction to the extent that it is governed by another article of [the 
Uniform Commercial Code]. 

§ 1­108. Relation to Electronic Signatures in Global and National Commerce Act 

This article modifies, limits, and supersedes the federal Electronic Signatures in Global and National 
Commerce Act, 15 U.S.C. Section 7001 et seq., except that nothing in this article modifies, limits, or 
supersedes Section 7001(c) of that Act or authorizes electronic delivery of any of the notices 
described in Section 7003(b) of that Act. 

ESIGN ACT: TITLE 15 > CHAPTER 96 > SUBCHAPTER I > § 7003 Specific exceptions1 
 
   (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.  

PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION 

§ 1‐201. General Definitions. 

(a) Unless the context otherwise requires, words or phrases defined in this section, or in the 
additional definitions contained in other articles of [the Uniform Commercial Code] that apply to 
particular articles or parts thereof, have the meanings stated. 

(b) Subject to definitions contained in other articles of [the Uniform Commercial Code] that apply to 
particular articles or parts thereof:  

 (9) "Buyer in ordinary course of business" means a person that buys goods in good faith, without 
knowledge that the sale violates the rights of another person in the goods, and in the ordinary 
course from a person, other than a pawnbroker, in the business of selling goods of that kind. A 
                                                            
1
 http://www.law.cornell.edu/uscode/15/7003.html 

Page 28 of 37 8/16/10
person buys goods in the ordinary course if the sale to the person comports with the usual or 
customary practices in the kind of business in which the seller is engaged or with the seller's own 
usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or 
minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of 
business may buy for cash, by exchange of other property, or on secured or unsecured credit, and 
may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that 
takes possession of the goods or has a right to recover the goods from the seller under Article 2 may 
be a buyer in ordinary course of business. "Buyer in ordinary course of business" does not include a 
person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of 
a money debt. 

Again, the author’s favorite, "Buyer in ordinary course of business" means a person that buys goods in 
good  faith,..”  Better  polish  your  boots  on  this  one.  The  banks  are  not  the  purchaser;  the  newly 
created  Investment  Trust  Vehicle  was  the  purchaser.  The  banks  only  operate  as  underwriters, 
trustees and servicers of these newly created Investment Trust Vehicles. 
 
(21) "Holder" means: (A) the person in possession of a negotiable instrument that is payable either to 
bearer or to an identified person that is the person in possession; or (B) the person in possession of a 
document  of  title  if  the  goods  are  deliverable  either  to  bearer  or  to  the  order  of  the  person  in 
possession. 
 
What  is  needed  to  be  understood  is  that  the  original  “Wet  Ink”  negotiable  instrument  is  not  the 
instrument  that  was  negotiated/assigned/transferred  to  the  newly  created  Investment  Vehicle.  The 
creators  of  the  Investment  Trust  Vehicle  assigned/transferred  an  electronic  negotiable  instrument, 
which lacks supporting laws to exist. This electronic negotiable instrument was created by scanning the 
original  “Wet  Ink”  negotiable  instrument,  and  this  electronic  digitized  copy  was  to  be  called  the 
“authoritative copy” of the “transferable record.”  It is this “authoritative copy” that was electronically 
assigned/transferred  in  book  entry  form.    In  actuality,  the  registry  that  identifies  the  “authoritative 
copy”  was  updated  to  reflect  who  had  beneficial  ownership  rights  of  the  “authoritative  copy”.  Since 
there  was  no  negotiation  of  the  original  “Wet  Ink”  negotiable  instrument  to  the  newly  created 
Investment Trust Vehicle, the Investment Trust Vehicle never became the holder or holder in due course 
of the original “Wet Ink” negotiable instrument. 
 
Of particular note: if the original “Wet Ink” negotiable instrument by chance was not destroyed, then a 
high  probability  exists  that  the  original  lender  vaulted  the  documents  and  the  same  registry,  (MERS), 
that  identified  the  ownership  of  the  “authoritative  copy”  will  also  identify  the  custodian  holding  the 
original “Wet Ink” and the identity of the entity that has beneficial ownership rights of the documents 
being held by this custodian. 

PART 3.  ENFORCEMENT OF INSTRUMENTS 

§ 3‐301.  PERSON ENTITLED TO ENFORCE INSTRUMENT. 

"Person entitled to enforce" an instrument means (i) the holder of the instrument, (ii) a nonholder 
in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of 
the instrument who is entitled to enforce the instrument pursuant to Section 3‐309 or 3‐418(d).  A 
person may be a person entitled to enforce the instrument even though the person is not the owner 
of the instrument or is in wrongful possession of the instrument. 

As the newly created Investment Trust Vehicle has only ownership right to the “authoritative copy”
and beneficial ownership right to the original non-negotiated “Wet Ink” negotiable instrument
they have not met the definition of “Holder”. 

Page 29 of 37 8/16/10
 

§ 3‐302.  HOLDER IN DUE COURSE. 

(a)  Subject to subsection (c) and Section 3‐106(d), "holder in due course" means the holder of an 
instrument if: 

(1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of 
forgery or alteration or is not otherwise so irregular or incomplete as to call into question its 
authenticity; and 

What the courts do not see is that the electronic negotiable instrument does not bear apparent 
evidence of forgery or alteration; it just cannot legally exist under current laws. 

(2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the 
instrument is overdue or has been dishonored or that there is an uncured default with respect to 
payment of another instrument issued as part of the same series, (iv) without notice that the 
instrument contains an unauthorized signature or has been altered, (v) without notice of any claim 
to the instrument described in Section 3‐306, and (vi) without notice that any party has a defense 
or claim in recoupment described in Section 3‐305(a). 

In “good faith”… have to re‐polish the boots on this one as there is absolutely no “good faith” where 
there is an intentional act of not following the written laws .  

(b)  Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of 
a defense under subsection (a), but discharge is effective against a person who became a holder in 
due course with notice of the discharge.  Public filing or recording of a document does not of itself 
constitute notice of a defense, claim in recoupment, or claim to the instrument. 

(c)  Except to the extent a transferor or predecessor in interest has rights as a holder in due course, 
a person does not acquire rights of a holder in due course of an instrument taken (i) by legal 
process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by 
purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as 
the successor in interest to an estate or other organization… 

The author was required to redirect attention back to the negotiable instrument; this document 
does not dwell into the issues of bifurcation of the security instrument from the negotiable 
instrument or about the perfection/continuous perfection of the security instrument. 

Time to polish the boots and glue them on, this dance is going to get deep. 

Shinola was immortalized in colloquial English with the phrase, “You don't know shit from
Shinola,” which first became widely popular during World War II.2

Maybe one day law enforcement will learn the difference. 

                                                            
2
 http://en.wikipedia.org/wiki/Shinola 

Page 30 of 37 8/16/10
 Charts for “Buyer in Due Course”
Loan Originator

Real Property
Tangible Custodian

Paper Promissory Note Paper Promissory Note

If Vaulted
Deed of Trust Deed of Trust

Conversion From
Paper to Electronic Step X
Lacks Supporting Law
ESIGN & UETA Scan/Copy MERS Registry
Excludes
Articles 3 & 9
Destroy Beneficial Ownership Electronic Note
Ownership Rights to Custodial Documents

Personal Property
Intangible

Electronic Note

Electronic Deed of Trust

Deed of Trust MERS as Nominee/
Registered Beneficiary Under
MERS System Deed of Trust
Invalid Perfection
If Filed
Assignor Electronic Note Public Records

Non UCC Negotiation Tangible Paper Note

MERS Registry Updated
Seller Beneficial Owner Electronic Note
Seller Rights to Custodial Documents

Assign
Transfer

Investment Trust Vehicle

Seller – Assignee of Electronic Note
Personal Property
Intangible Banks
As
Electronic Note Underwriter Investment Trust
Trustee
Electronic Deed of Trust Servicer
Master Servicer

Assignor Electronic Note

© CopyrightedPage
j.mcguire
31 ofP37
O Box 1352, Bedford,
8/16/10Texas 76095-1352
 Investment Trust Vehicle
Seller – Assignee of Electronic Note
Personal Property MERS Registry Updated
Beneficial Ownership Electronic Note
Intangible Ownership Rights to Custodial Documents
Electronic Note
Electronic Deed of
Trust

Assignor Electronic Note

Non UCC Negotiation Tangible Paper Note

Assign/Transfer

Investment Trust Vehicle

Depositor – Assignee of Electronic Note
Personal Property MERS Registry Updated
Beneficial Ownership Electronic Note
Intangible Ownership Rights to Custodial Documents
Electronic Note
Electronic Deed of
Trust

Assignor Electronic Note

Non UCC Negotiation Tangible Paper Note

Assign/Transfer

Investment Trust Vehicle

Trustee – Assignee of Electronic Note
Personal Property MERS Registry Updated
Beneficial Ownership Electronic Note
Intangible Ownership Rights to Custodial Documents
Electronic Note
Electronic Deed of
Trust

Assignor Electronic Note

© CopyrightedPage
j.mcguire
32 ofP37
O Box 1352, Bedford,
8/16/10Texas 76095-1352
 “eFraud” 
eNotes – eClosing – eMortages – eSign 
Perfection and Loss of Perfection (Security Instrument) 
By J. McGuire 
 
 
The collection rights given in the Paper Promissory Note, if transferred, assigned, or sold 
to a Mortgage Backed Security, must be a Negotiable Instrument, must be  “in writing” 
(tangible  form)  identifying  an  indebtedness  which  is  governed  by  the  Uniform 
Commercial Code Article 3: Negotiable Instruments or the states equivalence. This Paper 
Promissory Note by itself is an “Unsecured” indebtedness. 
 
 Where  the  lender  requires  a  Security  Instrument  to  be  part  of  the  loan  package,  this 
Security Instrument states the property is to be used as collateral for the repayment of 
the indebtedness noted in the Paper Promissory Note. This Security Instrument contains 
language that stating that if the indebtedness, the lender, as the secured party, (Holder in 
Due Course with rights to the Paper Promissory Note), by the authority granted in the 
Security  Instrument,  could  foreclose  and  sale  the  property  to  satisfy  the  indebtedness. 
When  the  Paper  Promissory  Note  is  accompanied  by  a  Security  Instrument  such 
indebtedness is considered to be a “Secured” indebtedness. 
 
The  “Secured”  indebtedness  will  survive  through  a  bankruptcy  action,  whereas  an 
“Unsecured” indebtedness may or may not survive through a bankruptcy action. 
 
One has to wonder how a large corporation can emerge from bankruptcy in a matter of 
months with a lot of indebtedness gone; he who has a secured loan and he who does not 
is  the  answer.  Example,  GM:  how  many  debts  were  “Secured”  and  how  many  were 
“Unsecured”?  The  banks’  loans  usually  are  “Secured”  while  all  others  are  “Unsecured.” 
Banks get paid and stockholders and investors get the empty baby bottle. Consider this: 
the banks generally write all the contracts ‐ as such, the banks will write the contracts to 
protect themselves while leaving the losses to all others. 
 
Under  the  Uniform  Commercial  Code  Article  9,  there  is an  automatic  perfection  of  lien 
rights  that  is  created  when  the  Security  Instrument  attaches  to  the  Paper  Promissory 
Note  by  the  signing  of  all  documents  at  closing.  Of  note:  this  automatic  perfection  is 
limited  in  time  and  to  convert  this  temporary  perfection  into  a  permanent  perfection, 
local  laws  of  jurisdiction  must  be  followed.  So  it  is  not  uncommon  to  find  the  Security 
Instrument filed in Public Records to convert a temporary perfection of lien rights into a 
permanent perfection of lien rights. The Security Instrument represents the “lien.” 
 
In  the  days  of  paper,  when  the  Paper  Promissory  Note  was 
sold/assigned/transferred/negotiated  to  a  subsequent  3rd  party  purchaser, 
©2010  j.mcguire                                    P O Box 1352, Bedford, Texas, USA 76095‐1352 
Revision 1  Page 1 
 

Page 33 of 37 8/16/10
 endorsements  were  noted  on  the  Paper  Promissory  Note,  which  under  the  UCC 
completed the negotiation; also, a “Notice of Assignment” was filed by the subsequent 3rd 
party  purchaser  in  Public  Records,  which  notices  transfer  of  lien  rights  to  the 
subsequent 3rd party purchaser, and, as such, continuous perfection, “Perfected Chain of 
Title,” was maintained of lien rights in Public Records. 
 
Under the UCC, Perfection and Perfection for Priority have different meanings. 

§ 9­301. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS.1 

Except  as  otherwise  provided  in  Sections  9­303  through  9­306,  the  following  rules  determine  the  law 
governing  perfection,  the  effect  of  perfection  or  nonperfection,  and  the  priority  of  a  security  interest  in 
collateral:” 

How do you create an eNote from a Paper Promissory Note?  Scan it. 
How do you create an eNote at an eMortgage closing?  Sign it electronically. 
 
A Negotiable Instrument is governed by the Uniform Commercial Code Article 3 and the 
states  equivalence.  The  UCC  allows  the  Negotiable  Instrument  to  be  only  in  tangible 
paper form. 
 
The  banks  have  been  alleging  the  eSign  Act  allows  for  the  existence  of  an  eNote 
(Transferable  Record)  as  being  a  negotiable  instrument  under  the  UCC.    As  this  eNote 
Transferable  Record  is  not  in  paper  tangible  form,  it  does  not  meet  the  UCC 
requirements to be a negotiable instrument. 
 
In this day of electronics, it is this eNote that is transferred/assigned to a subsequent 3rd 
party, 4th party, or 5th party, on up to the securities market or Fannie and Freddie. 
 
Note: the author did not state that the note was negotiated up to any party. 
 
As these transfers/assignments are in electronic form there has been no negotiation of 
any  note,  “Paper  or  Electronic.”  In  fact,  an  eNote  could  never  be  negotiated  under 
current  laws  and  as  such  no  party  other  than  the  originating  lender  could  claim  to  be 
“Holder  In  Due  Course.”  For  the  subsequent  4th  or  5th  party  to  claim  they  have  a  valid 
Security Instrument to exercise the “Power of Sale Clause” is an absolute falsehood. 
 
The legal counsels for the subsequent 4th or 5th parties then attempt to foreclose by filing 
fraudulent “Notices of Assignment” in Public Records showing “negotiation” of an eNote; 
eNotes lacks supporting laws.  The fraudulent filings upon Public Records are the “Ball & 
Chain” that is misrepresented to provide the illusion that they have legal authority.

                                                            
1
 http://www.law.cornell.edu/ucc/9/article9.htm#s9‐301 
©2010  j.mcguire                                    P O Box 1352, Bedford, Texas, USA 76095‐1352 
Revision 1  Page 2 
 

Page 34 of 37 8/16/10
 Perfected Security Instrument
Follows The Paper Negotiated Promissory Note

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.

Page 35 of 37 8/16/10
 Assigned - Perfected Security Instrument
Does Not Follow The Paper Negotiated Promissory Note

Interest In
Personal Property

Security Instrument In MERS as

Paper Promissory Note

Name Does Not Follow

Invalid Perfection
Promissory Note
UCC Article 3

UCC Article 9
Negotiation

Nominee
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.

Page 36 of 37 8/16/10
 Non-Perfected Security Instrument
Does Not Follow The Electronic Negotiated Promissory Note

Interest In
Personal Property

Security Instrument In MERS as

Electronic Promissory Note

Name Does Not Follow

Lacks Supporting Law

Invalid Perfection
Promissory Note
UCC Article 3

UCC Article 9
Negotiation

Nominee
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.

Page 37 of 37 8/16/10