N.C. Ct. of Appeals: In re Perry- Rights of Holder and Owner of Mortgage Note Indistinguishable

Summary: Perry executed a note and Deed of Trust in favor of American Home Mortgage (AHM), with two individuals named as Trustees and MERS named as the beneficiary and “solely as nominee” for AHM. Citimortgage acquired the mortgage through an endorsement by AHM. Following default by Perry, Trustee Services of Carolina (TSC) was appointed as the substitute trustee and a foreclosure was ultimately allowed by the Clerk of Court. Perry filed a motion for stay of the foreclosure order pursuant to Rule 60(b), arguing that new evidence showed Fannie Mae had previously acquired the note and that Citimortgage was not the real party in interest. Relying on RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 32 A.3d 307 (2011), Perry asserted that there is a “distinction between rights of a mere holder of a note and an owner of a note.”“ The Court of Appeals rejected this argument finding that, pursuant to the UCC, the “holder” is “[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession[.]” N.C.G.S. § 25-1-201(21)(a). Further, “[a]n instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.” N.C.G.S. § 25–3–203(a). Under North Carolina law, there is no distinction between the rights of a holder and an owner of a note. For a copy of the opinion, please see: Perry- Rights of Holder and Owner of Mortgage Note Indistinguishable.pdf