Archives: Glossary

Under federal securities law, a broad category of investments including notes, stocks, bonds, evidences of indebtedness and investment contracts.

A contract that governs a securitization trust: how loans are transferred into the trust, and the duties of the depositor, the trustee and the servicer. For publicly offered securitizations, these agreements are often filed with the Securities and Exchange Commission. Whether a borrower may challenge an assignment based on noncompliance with the agreement depends on state law and the facts; many courts have held that borrowers generally lack standing to enforce such agreements.

Pooling loans or receivables — such as mortgages, auto loans or credit-card balances — and selling interests in the pool to investors, who are paid from the borrowers’ payments. The pool is usually held by a trust under a pooling and servicing agreement, and a servicer collects payments. Courts have consistently held that securitizing a loan does not by itself make the note unenforceable or cancel the borrower’s obligation to repay it.

A paper affixed to a negotiable instrument, treated as part of the instrument for indorsements.

A signature on an instrument made to negotiate it, restrict payment or incur indorser’s liability.

Under UCC § 3-301, the holder of an instrument, a nonholder in possession with the rights of a holder, or a person entitled to enforce a lost or similar instrument.

A holder who took a negotiable instrument for value, in good faith and without notice of listed problems, and so takes free of many defenses.

Under UCC § 1-201(b)(21)(A), the person in possession of a negotiable instrument payable to bearer or to that identified person.

A party’s legal right to bring a claim or ask a court for relief.

The sequence of recorded transfers of an interest in property from earlier holders to the current one.