letter to az attorney general re vasquez certified question w ucc permanent editorial board report...

7/31/2019 Letter to AZ Attorney General Re Vasquez Certified Question w UCC Permanent Editorial Board Report Attached

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Law Office of Ronald Ryan, P.C.Licensed in Arizona and Texas Ronald Ryan

Attorney at Law1413 E. Hedrick Drive

Tucson, Arizona 85719phone: (520)298-3333

fax: (520)743-1020

[email protected]

September 20, 2011

Mr. Thomas C. HorneAttorney GeneralAssistant Attorneys GeneralPublic Advocacy Division1275 W. WashingtonPhoenix, Arizona 85007-2997sent via (602)542-4377 (fax)

and [email protected]

Attorney for Amicus Curiae

PLEASE FORWARD A COPY TOCarolyn R. Matthews, Asst AZ Atty GenDena R. Epstein, Asst AZ Atty GenDonnelly A. Dybus, Asst AZ Atty Gen

RE: Brief of Amicus Curiae State of Arizona, Constituting the Opinionof the Arizona Attorney General, to the Arizona Supreme Court inVasquez Deutsche Bank National Trust Company, as Trustee forSaxon Asset Securities Trust 2005-3; Saxon Mortgage, Inc.("DBNTC"), No. CV 11-0091-CQ (Ariz. S. Ct. 2011), CertifiedQuestion from Bankruptcy Case, In re Vasquez,4:08-bk-15510-EWH (Bky. D. Ariz Tucson)

Dear Mr. Horne and other involved Assistant Attorneys General:

I have been following the Vasquez vs. Deutsche Bank National TrustCompany, as Trustee for Saxon Asset Securities Trust 2005-3, (DBNTC) et al;,No. CV 11-0091-CQ (Ariz. S. Ct. 2011), Certified Question from Bankruptcy Case,In re Vasquez, 4:08-bk-15510-EWH (Bky. D. Ariz Tucson).

I recently faxed and emailed you a letter summarizing the UCC PEB Report andUCC Art 9 Application to the transfer of mortgages incident to the sale of negotiableand non-negotiable promissory notes.


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Here is my updated rendition of Article 9 applicable to sales of notes, and theonly statutory and definitive authority for transferring mortgages incident to the saleof negotiable and non-negotiable promissory notes, and it includes recordingrequirements. I also emailed Word and Adobe versions of the attached. This hasbeen redone and is much better than the prior version. There were errors in my prior

version. I will be at the oral argument. Good luck.

Cordially yours,

/s/ Ronald RyanRonald Ryan

RWREnclosure

2


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Ronald Ryan

Ronald Ryan PCAttorney at Law1413 E. Hedrick DriveTucson, Arizona 85719(520)298-3333 fax: (520)743-1020

[email protected] #018140 Pima County #65325

ARTICLE 9 APPLICATION TO SALES OF NEGOTIABLE AND NON-NEGOTIABLE

PROMISSORY NOTES AND INCLUDES THE ONLY WAY THAT A MORTGAGE

INCIDENT TO THE SALE OF A NOTE CAN BE ACCOMPLISHED

Source, see March 29, 2011, Draft Report of the Permanent Editorial Board on the

UCC Rules Applicable to the Assignment of Mortgage Notes and to the Ownership

and Enforcement of Those Notes and the Mortgages Securing Them, plusintroductory letter from Board Chairman

1

The security interest follows ownership of the Loan/Note. This rule has been

codified in ARS 33-817. The transfer of any contract or contracts secured by a trust

deed shall operate as a transfer of the security for such contract or contracts. The

phrase transfer of any contract, does not refer to transfer of the right to enforce the

Note, or holder status, it means transfer of ownership of the Loan.2

UCC Article 3

applies to the right to enforce promissory notes, but not to the ownership of notes, no

1 See http://docs.google.com/viewer?a=v&q=cache:1iCsqRxN-

CYJ:extranet.ali.org/directory/files/PEB_Report_on_Mortgage_Notes-

Circulation_Draft.pdf+American+Law+Institute+and+the+Uniform+Law+Commission,+the+or

ganizations+that+jointly+sponsor+the+UCC,+established+the+Permanent+Editorial+Board+for+the+Uniform+Commercial+Code&hl=en&gl=us&pid=bl&srcid=ADGEESi4LGDLbXX6yZG

VqMSbZTpLTJgwr2eXB9nh2LqgtihUwuIVP6catuvoV-

NoOqChWVEoU3piXZJ2BHZWj4QyCL5qbpEy92lRTe9itlda-PJRpPPQfzrwoQWJj-XQyy98qQs2Pso7&sig=AHIEtbScAm5B0hAJH_Xec46DDM7h-6gASg&pli=1

2 "Contract", as distinguished from "agreement", means the total legal obligation that results

from the parties' agreement as determined by this title [UCC Art. 9] as supplemented by anyother applicable laws. ARS 47-1201 (B)(12).


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to the right to enforce the deed of trust rights incident to the sale of said notes. Article

9 applies to sales of negotiable and non-negotiable promissory notes. UCC 9-109(a)(3)

ARS 47-9109(A)(3). [Article 9] applies to. . . a sale of . . . promissory notes. Id

Ownership of the Loan/Note is required to enforce a mortgage and being the holder of a

note is insufficient. Exhibit M, p. 82. It must be borne in mind that in this context

definitions used are unexpected and should be studied.3

The rightful purchaser of a

Loan/Note that is secured by a deed of trust in real estate obtains the security interest.

The attachment of a security interest in a right to payment or

performance secured by a security interest or other lien on

personal or real property is also attachment of a security interest

in the security interest, mortgage or other lien.

ARS 47-9203(G); See also, as stated, ARS 33-817. However, in order to transfer

the security in the mortgage, there must be a true and valid sale of the

loan/note.4

For there to be a true sale, it must be complete, which requires

complete divestiture by the seller to the buyer, such that the sale is legally

enforceable between them.

3 See "Debtor" means . . . A seller of . . . promissory notes. . . ARS 47-9102(A)(28)(b).

"Secured party" means. . . a person to which . . . promissory notes have been sold. ARS 47-9102(A)(71)(d). "Security interest" . . . includes any interest of a . . . buyer of a promissory

note in a transaction that is subject to [UCC Article 9]. ARS 47-1201(B)(35); "Securityagreement" means an agreement that creates or provides for a security interest.. ARS 47-9102(A)(72). "Collateral" means . . promissory notes that have been sold. ARS 47-

9102(A)(12)(b).4 Error! Main Document Only.As used here, Mortgage is synonymous with the deed of

trust security interest. "Mortgage" means a consensual interest in real property, includingfixtures, that secures payment or performance of an obligation. ARS 47-9102(A)(55).


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A security interest attaches to collateral when it becomes

enforceable against the debtor with respect to the collateral, unless

an agreement expressly postpones the time of attachment.

ARS 47-9203(A). For the sale to be complete, three criteria must be met to

validly sell a loan/note, and the mortgage that goes with it, such that the buyer

(secured party) can enforce the mortgage against the homeowner. They are set

forth in ARS 47-9203(B). The first two are substantive and are extremely

important. First, the buyer does not have a security interest on the homeowners

property and the mortgage cannot be enforced by the loan/note buyer or their

agents, unless the loan/note was purchased for value. Second, the buyer does

not have a security interest on the homeowners property and the mortgage

cannot be enforced by the loan/note buyer or their agents, unless loan/note was

purchased from a party that owned the loan/note and mortgage, and was the

holder or otherwise had the right to transfer the note.

[A] Security interest is enforceable against the debtor and third

parties with respect to the collateral only if: 1. Value has been

given; 2. The debtor has rights in the collateral or the power to

transfer rights in the collateral to a secured party; and [the third

criterion is met].

ARS 47-9203(B)(1) and (2). The third criterion can be met in one of two ways.

The buyer of the loan/note has a document transferring ownership of the note to


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the buyer that has been signed by the seller, or the buyer has possession of the

note.

One of the following conditions is met: (a) The debtor hasauthenticated a security agreement that provides a description of

the collateral . . . ; (b) The collateral is in the possession of the

secured party under section 47-9313 pursuant to the debtor's

security agreement.

ARS 47-9203(B)(3).5

In addition to the above, in order to pursue non-judicial

foreclosure proceedings under the deed of trust, if there is not a valid assignment

of deed of trust of record, the purchaser of the loan/note and mortgage may,

prior to the recording of the notice of trustee sale, record the document

evidencing the sale of the loan/note and a sworn affidavit that the secured party

is entitled to enforce the mortgage nonjudicially.

If necessary to enable a secured party to exercise under subsection

A, paragraph 3 of this section the right of a debtor to enforce a

mortgage nonjudicially, the secured party may record in the office

in which a record of the mortgage is recorded: 1. A copy of the

security agreement that creates or provides for a security interest

in the obligation secured by the mortgage; and 2. The secured

party's sworn affidavit in recordable form stating that: (a) A default

has occurred; and (b) The secured party is entitled to enforce the

mortgage nonjudicially.

5 "Authenticate" means: (a) To sign; or (b) To execute or otherwise adopt a symbol, or encrypt

or similarly process a record in whole or in part, with the present intent of the authenticatingperson to identify the person and adopt or accept a record. ARS 47-9102(A)(7).


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ARS 47-9607(B). Obviously, if the party executing the Affidavit does not qualify

pursuant to ARS 47-9203(B)(1) and (2), and all other relevant provisions, they

would be committing perjury. Such affidavits must surely be challengeable on

cross-examination and with controverting evidence. We must be allowed to

discover proof that they truly purchased for value the Note from the party that

owned in previously.

The application of the above UCC Article 9 provisions to a transaction that

falls within its scope cannot be avoided by agreement. Furthermore, UCC Article

9 trumps common law. UCC Report, p2-3, fn 7-8; ARS 47-9602; ARS 47-1302.

/s/ Ronald Ryan

letter to az attorney general re vasquez certified question w ucc permanent editorial board report...

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