Consumer complaint received 2024-08-22 00:00:00
Product: Mortgage — FHA mortgage
Issue: Struggling to pay mortgage — Foreclosure
Company: Mr. Cooper Group Inc.
State: MD

Complaint narrative:
To : Mr. Cooper Attention Legal Department : I, XXXX XXXX, am writing in response to a letter I received on XX/XX/XXXX regarding the intent to foreclose on my property. On XX/XX/XXXX, I signed and issued a Promissory note to XXXX Mortgages. Shortly after closing, XXXX XXXX sold its rights to the note to Mr. Cooper. My note was converted into a draft made payable to Nationstar LLC. Since Mr. Cooper has previously identified itself as the holder in due course of this note, I hereby assert all claims and defenses that I have under the Uniform Commercial Code below. 

It has come to my attention that foreclosing my property will be in violation of the Uniform Commercial Code ( UCC ), IRS Tax Standards, and Generally Accepted Accounting Principles ( GAAP ) as specified under 12 U.S.C. 1831n ( a ) ( 2 ) ( A ).

Uniform Commercial Code According to the UCC, this Promissory Note is classified as : Negotiable Instrument ( UCC 3-104 ), and Collateral ( UCC 9-102 ( 12 ) ).

While I was aware that I had granted a security interest in the property, it was not disclosed that I had also given security interest in a monetary instrument ( note ) according to 31 cfr.1010.100 ( dd ) upon transfer. Since this instrument is a monetary instrument, I am entitled to valuable consideration as it states in UCC 3-303. If an issuer of a promissory note does not receive valuable consideration, it has a defense. In addition, if an obligor signed an instrument without knowledge of the instrument 's character, it is also a defense under UCC 3-305.

Under UCC 9-207, a secured party in possession or control of collateral : may hold as additional security any proceeds, except money or funds, received from the collateral.

shall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor ; and may create a security interest in the collateral. 

Please confirm whether Mr. Cooper is required to adhere to the provisions of the Uniform Commercial Code, which has been adopted by each state as law. If Mr. Cooper is exempt from these codes, please provide documentation of such an exemption. If Mr. Cooper is obligated to follow the Uniform Commercial Code, please address the following questions : How did Mr. Cooper purchase the note if it was made payable to Nationstar LLC? 
Has Mr. Cooper received or disbursed any funds or credits in connection with the Promissory Note? If so, why hasnt Mr. Cooper remitted any payments to me or towards the obligation? 

IRS Tax Standards According to IRS Publication 537, installment sales are to be reported as follows : A bond or other evidence of debt you receive from the buyer thats payable on demand or readily tradable in an established securities market is treated as a payment in the year you receive it. 

Readily tradable means traded on a registered national securities exchange or a foreign national securities exchange officially recognized by a governmental authority, and the security is deemed by the SEC to have a ready market ( IRC Section 401 ( a ) ( 35 ) ( ii ) ).

According to Mr. Coopers SEC filings, my promissory note is actively traded on the open market. Additionally, the note has been converted into a draft, rendering it payable on demand. Consequently, it should have been recorded as a payment to Mr. Cooper. 
Please answer the following : Is Mr. Cooper exempt from adhering to IRS standards for accounting for Promissory Notes? If so, please provide proof of exemption. 

If it is not exempt from following IRS standards, please provide me with a reasonable explanation of why the note has not been marked as a payment on its books and the account has not been set to zero? 

GAAP Accounting Principles As a publicly trading company, Mr. Cooper is required to follow Generally Accepted Accounting Principles ( GAAP ). These principles, established by the Financial Accounting Standards Board ( FASB ), assist in accounting for various financial instruments. According to FASB Statement No. 140, Line 16 : A debtor shall derecognize a liability if and only if it has been extinguished. A liability has been extinguished if either of the following conditions is met : a. The debtor pays the creditor and is relieved of its obligation for the liability. Paying the creditor includes delivery of cash, other financial assets, goods, or services or reacquisition by the debtor of its outstanding debt securities whether the securities are canceled or held as so-called treasury bonds XXXX 
b. The debtor is legally released from being the primary obligor under the liability, either judicially or by the creditor Financial assets are defined as : cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to receive cash or another financial instrument from a second entity, or to exchange financial instruments on favorable terms with the second entity. 

Please answer the following questions : Is Mr. Cooper exempt from following the guidelines of G.A.A.P Principles? If so, please provide proof of exemption. 
Given that my contract is classified as a financial asset, could you please clarify why Mr. Cooper has not extinguished the debt upon the assignment of its rights in the instrument by XXXX XXXX? 

Following a review of the aforementioned violations, I request that Mr. Cooper promptly address this matter by taking the following action : Utilize the collateral instrument ( note ) to settle the account balance in full and cease any further foreclosure actions. 

Failure to provide a satisfactory response to all questions and implement the proposed solution will compel me to initiate an audit with the IRS and file a complaint with the SEC. I will also be filing a counterclaim in court and using further evidence to request a judgment for monetary damages and overpayment. I look forward to your prompt resolution of this issue.

Company response to consumer: Closed with explanation