Campbell's Argument Against FNMA

In my opinion, I believe that Campbell’s compliant against FNMA is considered reasonable. FNMA may assert that they are not liable for Mayberry’s deception and unethical action of changing the interest rate, assuming that they are protected. Although FNMA encountered a Letter of Commitment and is a holder in due course, they were not properly informed that the interest rates were unauthorized and that Campbell’s initials were forged. On the other hand, Campbell may argue that FNMA’s purchase of Mayberry’s notes and mortgages were void before the purchase. The time frames between the Letter of Commitment, the change of the interest rate, and the purchase of the note are significant in this case. The process of when the note and mortgage were …show more content…
FNMA had entered a “Letter of Commitment” with Mayberry, which indicates that the lender assures that the borrower’s guidelines and willingness of a home loan were approved. As a result, FNMA would believe that the note and mortgage were valid, and there were no prior disputes. In addition, FNMA is a holder in due course, which specifies that the individual received a negotiable instrument in good faith without knowing that there was an overdue or defect. In order for the lender to be a holder in due course (HDC), the note has to be a negotiable (Professor Murray, lecture, November 14, 2016). In this case, Campbell’s note and mortgage were considered to be negotiable instruments. The mortgagor could verify their protection under the HDC if fraud was claimed. FNMA is a government-sponsored enterprise that is involved in second mortgage markets. For this reason, they are not expected to be experts in evaluating and clarifying handwritten comparisons. In this case, an employee of FNMA named Bea Taylor claimed that she was not a handwriting expert and noticed that Campbell’s initials were not similar on the note. To put it in another way, an expert was not needed to detect that Campbell’s initials were not comparable. In sum, FNMA may dispute that Mayberry changing the interest rate is …show more content…
The holder in due course under U.C.C., a.k.a. FNMA, requires that the negotiable instrument “does not bear such apparent evidence of forgery or alteration” to be called into question (Nelson, 2015, p. 552). For example, Campbell’s initials next to the new raised interest rate was claimed to be forgery, while the employee from FNMA, Bea Taylor, testified that the signatures were not similar. Moreover, the determination between personal and real defenses may get complicated in order to commend Campbell’s complaint (Professor Murray, lecture, November 14, 2016). Real defenses give the borrowers the right to enforce against the second mortgagor, such as unauthorized signatures, fraud, and/or fraudulent alteration. In other words, Campbell’s initials were questionable and obviously defrauded. As a result, Campbell’s claim against FNMA is enforceable even though FNMA petitions to be