What is a “holder in due course” under California Commercial Code Section 3302 in relation to negotiable instruments (such as a secured mortgage note)?

By · May 31, 2010 · Filed in Uncategorized
California Produce the Note lawyer make them prove they are a holder in due course or a creditor of your loan
3302.  (a) Subject to subdivision (c) and subdivision (d) of Section
3106, "holder in due course" means the holder of an instrument if
both of the following apply:
   (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.
   (2) The holder took the instrument:
(A) for value, 

(B) in good faith,
(C) 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,
(D) without notice that the instrument contains an unauthorized signature
or has been altered,
(E) without notice of any claim to the
instrument described in Section 3306, and
(F) without notice that any
party has a defense or claim in recoupment described in subdivision
(a) of Section 3305.
   (b) Notice of discharge of a party, other than discharge in an
insolvency proceeding, is not notice of a defense under subdivision
(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 (1) by legal
process or by purchase in an execution, bankruptcy, or creditor's
sale or similar proceeding, (2) by purchase as part of a bulk
transaction not in ordinary course of business of the transferor, or
(3) as the successor in interest to an estate or other organization.
   (d) If, under paragraph (1) of subdivision (a) of Section 3303,
the promise of performance that is the consideration for an
instrument has been partially performed, the holder may assert rights
as a holder in due course of the instrument only to the fraction of
the amount payable under the instrument equal to the value of the
partial performance divided by the value of the promised performance.
   (e) If (1) the person entitled to enforce an instrument has only a
security interest in the instrument and (2) the person obliged to
pay the instrument has a defense, claim in recoupment, or claim to
the instrument that may be asserted against the person who granted
the security interest, the person entitled to enforce the instrument
may assert rights as a holder in due course only to an amount payable
under the instrument which, at the time of enforcement of the
instrument, does not exceed the amount of the unpaid obligation
secured.
   (f) To be effective, notice shall be received at a time and in a
manner that gives a reasonable opportunity to act on it.
   (g) This section is subject to any law limiting status as a holder
in due course in particular classes of transactions.
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Comments

[...] “negotiating” secured instruments and cited the holder in due course rule under California law: http://www.producethenoteattorney.com/2010/05/what-is-a-holder-in-due-course-under-california-commer….   In this case, the loan was negotiated from Mortgage IT to Indymac, but not from Indymac to [...]

[...] secured instruments and cited the holder in due course rule under California law: http://www.producethenoteattorney.com/2010/05/what-is-a-holder-in-due-course-under-california-commer….   In this case, the loan was negotiated from Mortgage IT to Indymac, but not from Indymac to [...]

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