Bennett v. CIT Bank, N.A.

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

JEANETTE BENNETT, et al., ]

]

Plaintiffs, ]

]

v. ] CIVIL ACTION NO.

] 2:18-CV-00852-KOB

CIT BANK, N.A., et al., ]

]

Defendants. ]

MEMORANDUM OPINION

In 1846, Chief Justice John Bannister Gibson of the Pennsylvania Supreme Court pithily

described a negotiable instrument as a “courier without luggage.” Overton v. Tyler, 3 Pa. 346,

347 (Pa. 1846). “It is a requisite,” he wrote, “that it be framed in the fewest possible words, and

those importing the most certain and precise contract.” Id. In 1894, the Alabama Supreme Court

described a negotiable instrument as “carr[ying] on its face its own history, so that nothing can

be alleged against it . . . other than what is there apparent.” Brown v. First Nat. Bank, 15 So. 435,

436 (Ala. 1894).

Nowadays, negotiable instruments are governed by Article III of the Uniform

Commercial Code, which has been adopted, with some modifications, by all states. Alabama’s

U.C.C. defines a negotiable instrument as “an unconditional promise or order to pay a fixed

amount of money, with or without interest or other charges described in the promise or order.”

Ala. Code § 7-3-104(a). To be a negotiable instrument, paper (1) must be “payable to bearer or to

order at the time it is issued or first comes into possession of a holder,” (2) must be “payable on

demand or at a definite time,” and (3) cannot “state any other undertaking or instruction by the

person promising or ordering payment to do any act in addition to the payment of money.” Id.

In the case at hand, the court is faced with the question of whether a reverse mortgage note is a

negotiable instrument under Alabama’s U.C.C. A reverse mortgage is “[a] mortgage in which the

lender disburses money over a long period to provide regular income to the (usu. elderly)

borrower, and in which the loan is repaid in a lump sum when the borrower dies or when the

property is sold.” Reverse Mortgage, Black’s Law Dictionary (11th ed. 2019). Lenders may also

disburse money in a lump sum; it does not have to be over a long period time. Unlike a regular,

forward mortgage, a reverse mortgage increases the mortgagor’s debt and decreases the

mortgagor’s equity. Reverse Mortgage Loans: Borrowing Against Your Home, AARP 3, 4

(2010),

https://assets.aarp.org/www.aarp.org_/articles/money/financial_pdfs/hmm_hires_nocrops.pdf.

This case involves a dispute over who has rights to insurance proceeds on a home

encumbered by a reverse mortgage that caught fire just before the foreclosure sale. The case

involves several actors—Plaintiffs Jeanette Bennett and Maggie Bell, who were devised the

home encumbered by the reverse mortgage by their mother, decedent Catherine Getaw;

Defendant Fannie Mae, the owner of Ms. Getaw’s loan and the purchaser of her home at the

foreclosure sale; and CIT1, the purported servicer of the loan owned by Fannie Mae.

The case comes before the court on Defendant Fannie Mae’s “Motion to Reconsider This

Court’s Denial of Summary Judgment as to Plaintiffs’ Claim for Declaratory Judgment” (doc.

144). In August 2020, this court denied summary judgment to Fannie Mae on Plaintiffs’

declaratory judgment claim over who is entitled to the insurance proceeds; the court found that a

genuine issue of material fact existed as to “CIT’s authority to foreclose on the property and

obtain the insurance proceeds” and remit them to Fannie Mae as servicer of Fannie Mae’s loan

1 As in prior opinions, the court refers collectively to CIT, N.A. and CIT Group, Inc. collectively as “CIT”

throughout this opinion.

because the evidence did not clearly show that CIT had a valid assignment to service the

mortgage note. (Doc. 139 at 25). The court found that “Fannie Mae would be able to skirt the

issue of potentially tangled assignment if no issue of fact existed regarding CIT’s possession of

the mortgage note, endorsed in blank,” because under Alabama’s U.C.C., a holder of a note

endorsed in blank may enforce the instrument. (Id. at 26) (emphasis added).

In its motion for reconsideration, Fannie Mae argues that it submitted evidence on

summary judgment showing that CIT was the holder of the Note, endorsed in blank. (Doc. 144 at

2). Fannie Mae asks the court to “find that no genuine issue of fact exists, apply its prior

statement of the law, and determine that as the possessor of the original note endorsed in blank,

CIT had a right to collect the insurance proceeds.” (Id. at 7). Plaintiffs responded to the motion

(doc. 146), and Fannie Mae replied (doc. 147).

Several weeks after Fannie Mae’s motion was under submission to the court, Plaintiffs,

with the court’s leave, filed a sur-reply, arguing for the first time that the Note involved in this

case is not a negotiable instrument under Alabama’s U.C.C. (Doc. 148). Fannie Mae responded

to the sur-reply, arguing that the Note is a negotiable instrument and that, even if it is not, the

Note is otherwise enforceable by a holder under Alabama law. (Doc. 150). Fannie Mae’s motion

for reconsideration is ripe for review.

Initially, the court faced the simple question of whether the summary judgment evidence

Fannie Mae submitted showed that CIT held the Note endorsed in blank at the time of the

foreclosure and fire. Now, the court faces a different question: whether the Note involved in this

case is a negotiable instrument under Alabama’s U.C.C. In its summary judgment opinion (doc.

139), the court assumed that, like most mortgage notes, the Note in this case was negotiable.

Now that Plaintiffs have raised the issue and the court has carefully considered the matter, the

court concludes that the Note at issue in this case is not a negotiable instrument under Alabama’s

U.C.C. and, thus, CIT could not enforce the Note solely as holder of the Note endorsed in blank.

The court further finds that CIT could not enforce the Note by virtue of holding the Note under

other provisions of Alabama law. Thus, despite the evidence Fannie Mae submitted showing that

CIT held the Note endorsed in blank, the court DENIES Fannie Mae’s motion for

reconsideration. The court sua sponte corrects its assumption in its summary judgment opinion

that the Note involved in this case is a negotiable instrument falling under Alabama’s U.C.C. that

could be enforced by a holder of the Note endorsed in blank (doc. 139 at 26). The court’s

conclusion on summary judgment that a genuine issue of material fact exists as to “whether CIT

had a valid interest as a mortgagee that allowed it to collect the insurance proceeds and pass

them onto Fannie Mae” stands. (Id. at 25). At trial, the court must determine whether Plaintiffs or

Defendant Fannie Mae are entitled to the insurance proceeds.

I. Background

The court set out the factual background and procedural history in a prior opinion. (Doc.

139).

II. Standard of Review

Fannie Mae asks the court to reconsider its summary judgment order under Federal Rule

of Civil Procedure 54(b). Under Rule 54(b), a court may revise “any order or other decision . . .

that adjudicates fewer than all claims or the rights and liabilities of fewer than all the parties” at

“any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and

liabilities.” Whether to grant a motion to reconsider under Rule 54(b) is “committed to the sound

discretion of the district judge.” Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993

F.2d 800, 806 (11th Cir. 1993). The Eleventh Circuit “ha[s] at least indicated that Rule 54(b)

takes after Rule 60(b).” Hermann v. Hartford Life & Accident Ins. Co., 508 Fed. App’x. 923, 927

n. 1 (11th Cir. 2013) (citing Fernandez v. Bankers Nat’l Life Ins. Co., 906 F.2d 559, 569 (11th

Cir. 1990)). Under Rule 60(b), a court may provide relief for reasons such as “mistake,

inadvertence, surprise, or inexcusable neglect” and “any other reason that justifies relief.”

III. Discussion

Now that Plaintiffs have raised the issue of the Note’s negotiability in their sur-reply, the

court must consider two questions to decide whether Fannie Mae’s motion for reconsideration is

due to be granted: first, whether the reverse mortgage note meets the requirements of a

negotiable instrument under Alabama’s U.C.C., which would allow CIT to enforce the Note as

the holder of the Note; and second, whether CIT could enforce the Note as holder of the Note

under other provisions of Alabama law if the Note is not a negotiable instrument.

A. Negotiability of the Note

Ala. Code § 7-3-104(a) provides that a negotiable instrument is “an unconditional

promise or order to pay a fixed amount of money.” To be a negotiable instrument, paper must be

“payable to bearer or to order at the time it is issued or first comes into possession of a holder,”

must be “payable on demand or at a definite time,” and cannot “state any other undertaking or

instruction by the person promising or ordering payment to do any act in addition to the payment

of money.” Id. The Code provides that “a promise or order is unconditional unless it states (i) an

express condition to payment, (ii) that the promise or order is subject to or governed by another

writing, or (iii) that rights or obligations with respect to the promise or order are stated in another

writing.” Ala. Code § 7-3-106 (emphasis added). “A reference to another writing does not of

itself make the promise or order conditional.” Id.

A typical mortgage note qualifies as a negotiable instrument governed by Alabama’s

Uniform Commercial Code. Summerlin v. Shellpoint Mortg. Servs., 165 F. Supp. 3d 1099, 1108

(N.D. Ala. 2016) (citing Sturdivant v. BAC Home Loan Servicing, LP, 159 So. 3d 47, 55 (Ala.

Civ. App. 2013)). Plaintiffs assert that while Alabama courts have found mortgage notes to be

negotiable instruments in a generalized way, “a document’s specific provisions establish whether

it is a negotiable instrument.” (Doc. 148 at 6). The court agrees.

The court could find no cases in Alabama that instruct as to the negotiability of reverse

mortgage notes. The court thus looks to cases from courts in other states that have analyzed

reverse mortgage notes and to the face of the Note. See Holsonback v. First State Bank of

Albertville, 394 So. 2d 381, 383 (Ala. Civ. App. 1980) (“Negotiability is determined from the

face, the four-corners, of the instrument without reference to extrinsic facts.”).

To persuade the court that the Note in this case is not negotiable, Plaintiffs point the court

to an unpublished case in which a Florida trial court found that a reverse mortgage note similar

to the one in this case was not a negotiable instrument, as well as a New York case in which a

New York appellate court found that a reverse mortgage agreement “was not, and was never

intended to be, a negotiable instrument.” See Reverse Mortgage Funding, LLC. V. Harriet R.

Callahan et al., slip op. at 1, No. 2016-CA-655 (Fla. Cir. Ct. July 17, 2017),

https://www.nclc.org/images/pdf/unreported/reverse_mortgage_v_unknown_heirs.pdf; OneWest

Bank, NA v. FMCDH Realty, Inc., 165 A.D. 3d 128, 135 (N.Y App. Div. Sept. 19, 2018).

Defendant similarly presents the court with persuasive authority: an unpublished case in

which a Missouri trial court found that a reverse mortgage note like the one in this case was a

negotiable instrument and several other cases in which various courts have applied Article III of

the U.C.C. to reverse mortgage notes but did not address negotiability. McClain v. Landmark

Equity Group, LLC, No. 1716-CV-03534 (Mo. Cir. Ct. Apr. 26, 2018); OneWest Bank, FSB v.

Simpson, 148 A.D.3d 920, 921−22 (N.Y. App. 2017); OneWest Bank, FSB v. Erickson, 367 P.3d

1063, 1078 (Wash. 2016); Fin. Freedom Acquisition, LLC v. Griffin, Case No. LLI-CV-

116004685S, 2015 Conn. Super. LEXIS 3061, at *7 (Conn. Super. Ct. Dec. 10, 2015).

The court has reviewed these cases, as well as several others it came across during its

own research on the issue of the negotiability and reverse mortgage notes. The court is persuaded

by some of the other courts’ reasoning in analyzing reverse mortgage notes, and ultimately, the

court looks at the actual terms of the Note at issue in this case to determine whether it is a

negotiable instrument. The court finds that this Note does not constitute a negotiable instrument

under Alabama law.

The Note in this case meets two of the requirements for negotiability: it is payable to

bearer, and it does not “state any other undertaking or instruction by the person promising or

ordering payment to do any act in addition to the payment of money,” as required under Ala.

Code § 7-3-104(a). But the Note fails to meet the other requirements, as it is not an unconditional

promise to pay, is not for a fixed amount of money, and is not payable on demand or at a definite

time. Thus, the Note is not a negotiable instrument.

1. Unconditional Promise to Pay

Under Alabama’s U.C.C., a note is unconditional “unless it states (i) an express condition to

payment, (ii) that the promise or order is subject to or governed by another writing, or (iii) that

rights or obligations with respect to the promise or order are stated in another writing.” Ala.

Code § 7-3-106(a). Referencing another writing is not enough to destroy negotiability; the note

must be subject to the other writing in order to be rendered nonnegotiable.

a) Reference to Another Writing

The Note in this case states that “Borrower promises to pay to the order of Lender a

principal amount equal to the sum of all Loan Advances made under the Loan Agreement with

interest.” (Doc. 120-1 at 14). Plaintiffs contend mention of the Loan Agreement destroys

negotiability. (Doc. 148 at 5). Defendant asserts that the “Note merely refers to the Loan

Agreement for a statement as to the amounts due and owing, but does not subject its

enforceability to the terms of the Loan Agreement.” (Doc. 150 at 7). Defendant points the court

to the Official Comments to Ala. Code § 7-3-106, which provide examples of language that

subjects a note to another writing and destroys negotiability. (Id. at 6). The Comments instruct:

For example, a promissory note is not an instrument defined by Section 3-104 if it contains

any of the following statements: 1. “This note is subject to a contract of sale dated April 1,

1990 between the payee and maker of this note.” 2. “This note is subject to a loan and

security agreement dated April 1, 1990 between the payee and maker of this note.” 3.

“Rights and obligations of the parties with respect to this note are stated in an agreement

dated April 1, 1990 between the payee and maker of this note.” It is not relevant whether

any condition to payment is or is not stated in the writing to which reference is made. The

rationale is that the holder of a negotiable instrument should not be required to examine

another document to determine rights with respect to payment.

Ala. Code § 7-3-106, Official Comment 1.

Here, the Note does not clearly state that the Note is subject to the Loan Agreement. But, the

last sentence of the Comment instructs that a holder “should not be required to examine another

document to determine rights with respect to payment.” Id.

Further, the Eleventh Circuit has stated,

The distinction between when a note’s reference to another writing does or does not defeat

negotiability . . . rests on two factors: the completeness and clarity of the note itself in

setting forth the parties’ obligations and the clarity and completeness of the reference . . . It

is the need to consult the other writing that makes the note incomplete on its face and

defeats negotiability.

DZ Bank AG Deutsche Zentral-Genossenschaftsbank v. McCranie, 720 Fed. App’x 576, 584

(11th Cir. 2018) (analyzing whether a note was a negotiable instrument under Kansas’s similar

U.C.C.); see also Foster v. Hacienda Nirvana, 32 So. 3d 1256, 1264 (Ala. 2009) (concluding

that a note was negotiable “[b]ecause it contains all of the characteristics of a negotiable

instrument as described in § 7-3-103(a) and it stands on its own without reliance on another

document”).

Ala. Code § 7-3-106(b) provides that a note “is not made conditional (i) by a reference to

another writing for a statement of rights with respect to collateral, prepayment, or acceleration.”

The Note at issue does not reference the Loan Agreement for a statement of rights with respect to

any of those issues but for the actual amount of the Loan. A holder could not look at the Note

and know its rights or the other party’s obligations with respect to payment; the holder would

have to look to the Loan Agreement to determine the amount of the Loan Advances. (Doc. 120-1

at 14).

The court finds that the Note is subject to the Loan Agreement because of the need to look

to the Loan Agreement to determine rights and obligations as to payment.

b) Express Condition

Plaintiffs assert that the express absolution of personal liability contained in the Note

destroys negotiability because Ms. Getaw did not make an unconditional promise to pay if she

had no personal liability for the debt. (Doc. 148 at 5). The Note states:

Borrower shall have no personal liability for payment of the debt. Lender shall enforce

the debt only through sale of the Property covered by the Security Instrument

(“Property”). If this Note is assigned to the Secretary, the Borrower shall not be liable for

any difference between the mortgage insurance benefits paid to Lender and the

outstanding indebtedness, including accrued interest, owed by Borrower at the time of the

assignment.

(Doc. 120-1 at 14) (emphasis added).

Defendant contends that the express absolution of personal liability is akin to limiting

payment “to a particular fund or source,” which does not destroy negotiability. See Ala. Code 7-

3-106(b) (“A promise or order is not made conditional . . . because payment is limited to resort to

a particular fund or source.”). But the court is not convinced. The language of the Note states that

Borrower has no personal liability; the Borrower does not have to pay the debt. The court finds

that this absolution of personal liability, apparent on the Note’s face, constitutes an “express

condition” to payment and destroys negotiability. See Reverse Mortgage Funding, LLC. V.

Harriet R. Callahan et al., slip op. at 6, No. 2016-CA-655 (Fla. Cir. Ct. July 17, 2017),

https://www.nclc.org/images/pdf/unreported/reverse_mortgage_v_unknown_heirs.pdf (holding

that a reverse mortgage note was conditional because it contained “specific language stating that

Defendant [would] have no personal liability for the amount owed”) (emphasis in original).

2. Fixed Amount of Money

The Note at issue in this case does not contain an unconditional promise; it also fails to

specify a “fixed amount of money.” The Note states:

In return for amounts to be advanced by Lender to or for the benefit of Borrower under the

terms of a Home Equity Conversion Loan Agreement dated December 7, 2005 (“Loan

Agreement”), Borrower promises to pay to the order of Lender a principal amount equal to

the sum of all Loan Advances made under the Loan Agreement with interest.

(Doc. 120-1 at 14).

The Note itself lists no amount of money. Yet Defendant argues that the

court can determine that a fixed amount of money existed at the time of the loan. (Doc. 150 at

10). The “Home Equity Conversion Mortgage Payment Plan,” which is part of the separate Loan

Agreement, shows a principal limit of $34,456.50 and that this entire amount was advanced to

the borrower at the time of the closing in a lump sum, rather than through monthly payments.

(Doc. 120-1 at 11).

But negotiability is determined from the face of the instrument, and the instrument itself

does not clearly contain a fixed amount. See OneWest Bank, N.A. v. FMCDH Realty, Inc., 165

A.D. 3d 128, 134 (N.Y. App. Div. Sept. 19, 2018) (finding that a cash account agreement in

which “the borrower promised to pay when due ‘all amounts advanced’” was not a negotiable

instrument because it did not contain a sum certain); Third Fed. Sav. & Loan Ass’n of Cleveland

v. Koulovaris, 257 So. 4d 652, 654 (Fla. Ct. App. May 18, 2018) (finding that a note that did not

show how much borrowers actually borrowed on its face did not contain a “fixed amount of

money”); Chuchian v. Situs Investments, LLC, 219 So. 3d 992, 993 (Fla. Ct. App. June 2, 2017)

(stating that a credit agreement “was a nonnegotiable instrument because it was not for a fixed

sum”); Resolution Trust Corp. v. Oaks Apts. Joint Venture, 966 F.2d 955, 1000−1002 (5th Cir.

1992) (finding that a note that did not “facially demand payment of a sum certain” was not

negotiable). To put it another way, the Note does not “carr[y] on its face its own history”

regarding how much Ms. Getaw borrowed. See Brown v. First Nat. Bank, 15 So. 435, 436 (Ala.

1894). Although the Loan Agreement shows that no further advances are available to the

Borrower because the amount disbursed at the time of closing equaled the principal limit, the

Note itself does not state the amount due.

3. Payable at a Definite Time

Lastly, the court finds that the Note is not negotiable because the Note does not indicate

that it is payable at a definite time. Ala. Code. § 7-3-104(a)(2) provides that a negotiable

instrument is “payable on demand or at a definite time.” To be payable on demand, a promise or

order must “state[] that it is payable on demand or at sight, or otherwise indicate[] that it is

payable at the will of the holder.” Ala. Code. § 7-3-108(a). The Note in this case says no such

thing and is not payable on demand.

To be payable at a definite time, a promise or order must be

payable on elapse of a definite period of time after sight or acceptance or at a fixed date

or dates or at a time or times readily ascertainable at the time the promise or order is

issued, subject to rights of (i) prepayment, (ii) acceleration, (iii) extension at the option of

the holder, or (iv) extension to a further definite time at the option of the maker or

acceptor or automatically upon or after a specified act or event.

Ala. Code. § 7-3-108(b).

Defendant points to the terms of the mortgage, which states that the Note is payable no

later than October 15, 2075. (Doc. 120-1 at 18). Defendant also states that the Lender can require

payment in full upon certain events—the Borrower’s death, the Borrower’s selling the property,

when the property ceases to be the principal residence of the Borrower, if the Borrower fails to

occupy the premises for more than 12 months because of physical or mental illness, or if

Borrower fails to fulfill an obligation under the Security Instrument. (Doc. 120-1 at 15). The

court finds that the events requiring payment in full constitute an acceleration clause, and the

court is not convinced the face of the Note shows that it is payable at a definite and ascertainable

time.

In conclusion, the court finds that the Note at issue in this case is not an unconditional

promise to pay a fixed amount of money at a definite time. Thus, the Note is not a negotiable

instrument falling under Alabama’s U.C.C., and Fannie Mae is not entitled to summary judgment

based upon CIT’s being the holder of a negotiable instrument.

B. Enforceability Outside the U.C.C.

Fannie Mae argues that the Note is enforceable and assignable under Alabama law, even

if the court determines that the Note is not a negotiable instrument. Fannie Mae states that

“possession of the original Note is prima facie evidence of its ownership and transfer regardless

as to whether or not the Note qualifies a negotiable instrument.” (Doc. 150 at 13). The court

agrees that the Note is assignable outside the U.C.C. but found on summary judgment that the

evidence showed “conflicting information regarding whether CIT had a valid, current assignment

granting it the right to service the mortgage note.” (Doc. 139 at 25). The court will now consider

whether CIT could enforce the Note as possessor of the Note endorsed in blank outside the

U.C.C.

Ala. Code § 35-10-12—a code section independent from Alabama’s U.C.C.—states that

the power of sale in a mortgage is enforceable by “any person, or the personal representative of

any person who, by assignment or otherwise, becomes entitled to the money thus secured.”

Under the U.C.C., the assignee of the mortgage can foreclose, the owner of the debt can

foreclose, or the holder of the note can foreclose; all are entitled to the money secured by the

mortgage. See Sturdivant v. BAC Home Loan Servicing, LP, 159 So. 3d 47, 53 (Ala. Civ. App.

2013) (“A deed resulting from a foreclosure sale may be deemed void when, among other things,

‘the foreclosing entity does not have the legal right to exercise the power of sale, as for example,

when that entity is neither the assignee of the mortgage . . . nor the holder of the promissory note

. . .”) (citing Campbell v. Bank of America, N.A., 141 So. 3d 492, 495 (Ala. Civ. App. 2012)).

Fannie Mae argues that the Note could be assigned and transferred to CIT “purely by

endorsement entirely independent of the UCC or its status as a negotiable instrument.” (Id. at

14) (emphasis in original). Fannie Mae points also to Ala. Code § 8-5-20, which is contained in

the chapter of the commercial code addressing “nonnegotiable instruments.” That provision

states that “[a]ll bonds, writings, and contracts for the payment of money, or other thing, or the

performance of any act or duty, are assignable by endorsement so as to authorize an action

thereon by each successive endorsee.” Fannie Mae argues that “the transfer and assignment of

the Note by its endorsement is authorized by Alabama statute and evidence of CIT’s right to

enforce the Note by its possession.” (Doc. 150 at 14).

The court is not convinced that CIT could enforce the Note as holder of the Note, because

CIT was not the owner of the debt or the truly interested party. In Hughes v. Black, 39 So. 984,

984 (Ala. 1905), the Alabama Supreme Court favorably described two Alabama Supreme Court

decisions involving “nonnegotiable paper,” like the Note in this case—Jarrell v. Lillie, 30 Ala.

271 (Ala. 1886) and Cobbs v. Bryant, 86 Ala. 316 (Ala. 1889). The Court held that the “court

properly decided that [the attorney’s possession of a nonnegotiable instrument in Jarrell and the

agent’s possession of a nonnegotiable instrument in Cobbs] was not sufficient to show that said

attorney or agent was the owner or party really interested in the note.” Hughes, 39 So. at 984.

Jarrell involved a nonnegotiable note that was payable to bearer, and the Court reasoned

that while “[p]ossession is prima-facie evidence of title or interest in the party having possession

. . . possession as an attorney, would not authorize a suit and recovery in the name of the

attorney.” 30 Ala. at 272−73. In Cobbs, which also involved a nonnegotiable note that was

payable to bearer, the Court stated that “[o]rdinarily possession of personal property is prima

facie evidence of ownership, but the possession of an agent does not prove an ownership in him

of the principal’s property.” 5 So. at 586.

The court admits that these are old cases on which it is hesitant to heavily rely. But the

bottom line is this: the court has found that the Note is not a negotiable instrument governed

under Alabama’s U.C.C., and Fannie Mae has not convinced the court that CIT could enforce the

Note solely by its possession of the Note endorsed in blank outside the U.C.C.

Instead, at trial, to show that it is entitled to the insurance proceeds, Fannie Mae must

show that CIT had authority to foreclose on Ms. Getaw’s property and obtain the insurance

proceeds because it had a valid assignment to service the mortgage and Note on behalf of Fannie

Mae. The court found on summary judgment that a genuine issue of material fact existed as to

this question. (Doc. 139 at 25). It still exists.

For the reasons explained, the court DENIES Fannie Mae’s motion for reconsideration.

But the court sua sponte corrects its erroneous assumption stated in its previous memorandum

opinion (doc. 139) that the reverse mortgage note involved in this case is a negotiable

instrument.

DONE and ORDERED this 16th day of June, 2021.

____________________________________

KARON OWEN BOWDRE

UNITED STATES DISTRICT JUDGE