39 W. St. U. L. Rev. 313 (2011-2012)
Mortgage Foreclosures, Promissory Notes, and the Uniform Commercial Code

handle is hein.journals/wsulr39 and id is 325 raw text is: Mortgage Foreclosures, Promissory Notes, and the
Uniform Commercial Code
By Douglas J. Whaley*
INTRODUCTION  .............................................................  313
THE LANDSCAPE OF THE MORTGAGE MESS ..................................        314
THE UNIFORM COMMERCIAL CODE..........................................        316
H older  ..........................................................  3 17
N egotiation........... ...........................................  317
The  A llonge  .......................................................  318
The  Shelter  R ule ...................................................  320
L ost  N otes.........................................................  321
The Golden Rule of Mortgage Foreclosure Under the UCC ..........      322
Is the  Promissory  Note Negotiable? .................................  324
THE DIFFERENCE BETWEEN THE NOTE AND THE MORTGAGE ..................          326
Security  Follows  the  Debt....... .................................  326
The  M erger  R ule...................................................  328
How To RESOLVE THESE MATTERS.........................................        331
C ONCLUSION ...............................................................  334
INTRODUCTION
As is true of many things in life the Uniform Commercial Code's statutes
concerning the role of promissory notes in a mortgage foreclosure are both simple and
at the same time complicated. The purpose of this article is to draw out the matter in
detail, but let's begin with the simple (and basic) rule first. Indeed let's call the Golden
Rule of Mortgage Foreclosure: the Uniform Commercial Code forbids foreclosure of
the mortgage unless the creditor possesses the properly-negotiated original promissory
note. If this can't be done the foreclosure must stop.
Of course there are exceptions and situations in which problems with the note
can be addressed and cleared up, and those will be explored as we progress. The
difficulty is that all too often the Golden Rule of Mortgage Foreclosure is simply
ignored and the foreclosure goes ahead as if the rule were not the statutory law of
every jurisdiction in the United States.'
* Professor Emeritus, The Ohio State University Moritz College of Law. The author would like to
thank Professor Stephen McJohn of the Suffolk University Law School for his help in researching this
article, and the many attorneys (often former students) whose contacts and questions has gotten him
involved in these issues. Professor Whaley's blog has a post which updates current developments in
mortgage foreclosure matters; see http://douglaswhaley.blogspot.com/2010/11/update-mortgage-fore
closure-and-missing.html.
1.  Article 3 of the Uniform Commercial Code has been adopted in all jurisdictions in the United States.
New York has adopted only the original version of Article 3, but in that state, the relevant citations
and the law remain the same with only minor variations in language.

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