Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 11

Transfer and Holder in Due Course. Germanie Fequiere executed and delivered a promissory note in the principal amount of $240,000 to BNC Mortgage. As security for the note, Fequiere executed and delivered a mortgage on real property. BNC endorsed the promissory note in blank. Several years later, when Fequiere failed to make payments on the note, Chase Home Finance, LLC-the holder in due course of the note and holder of the mortgage-moved to foreclose on the property Fequiere defended that Chase could not foreclose on the property because the mortgage on the property had not been properly transferred from BNC to Chase. Assuming that is true, does that mean Chase cannot, as holder of the negotiable note, act to foreclose on the collateral-that is, the property secured by the mortgage? Explain your answer. [ Chase Home Finance, LLC v Fequiere, 119 Conn.App. 570, 989 A.2d 606 (2010)]