Define negotiable instruments

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Reference no: EM133192206

In this exercise, you will get a deeper understanding of negotiable instruments and apply the learning from reading Chapter 13 in your textbook. Read through the scenarios below, and answer the following questions. Your answers should use a 12 point font, be double spaced, and use APA formatting to cite references on the last page of your assignment (if you use any external sources).

Answer the following questions:

Question 1. Define negotiable instruments in your own words. Provide an example of a negotiable instrument (check, promissory note, dollar bill etc.) and create a drawing or use an existing photo. On the image, label the parts of the negotiable instrument.

Question 2. Muriel Evans writes the following note on the back of an envelope: "I, Muriel Evans, promise to pay Karen Marvin or bearer $100 on demand." Is this a negotiable instrument? Discuss why or why not.

Question 3. Angela Brock borrowed $544,000 and signed a note payable to Amerifund Mortgage Services, LLC, to buy a house in Silver Spring, Maryland. The note was endorsed in blank and transferred several times "without recourse" before Brock fell behind on the payments. On behalf of Deutsche Bank National Trust Co., BAC Home Loans Servicing LP initiated foreclosure. Brock filed an action in a Maryland state court to block it, arguing that BAC could not foreclose because Deutsche Bank, not BAC, owned the note. Can BAC enforce the note? Explain why or why not.

Question 4. Becky Smith signed a note in the amount of $200,000 in favor of Country Home Loans, Inc., to obtain a loan to buy a house in Marrero, Louisiana. The note was endorsed "Pay to the order of ____________ without recourse Country Home Loans, Inc." Almost five years later Smith defaulted on the payments. The Federal National Mortgage Association (Fannie Mae) wanted to foreclose on the house and sell it to recover the balance due. Smith argued that the words "to the order of ____________" in the endorsement made the note an incomplete order instrument and that Fannie Mae could not enforce it. What is Fannie Mae's best response to this argument?

Reference no: EM133192206

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