While the ordinary way to foreclose on real estate is to produce the note or other evidence that one is a party entitled to enforce the note, foreclosure may be commenced even when the note cannot be produced even if the current mortgagee cannot produce the note and never possessed it. Porch Swing Holdings LLC v. Mallory, 345 A.3d 404 (R.I. 2025). Rhode Island had precedents which held that the holder of the mortgage has the right to foreclose. In this case, the mortgage was placed in the name of MERS (Mortgage Electronic Registration Service) and gave it the power to foreclose (the “power of sale”) and to assign the power to foreclose to another.
Not all courts agree and the confusion created by the subprime mortgage crisis led to conflicting court judgments about how a mortgagee can prove they have the right to foreclose. In general, the note holder or a person entitled to enforce the note under the UCC can bring a foreclosure action but some state statutes (like in Massachusetts) say that the only one who can foreclose is the “mortgagee” which may or may not be the note holder in states where they can be held in separate hands. The Rhode Island ruling in Porch Swing ensures that a foreclosure can happen; this avoid having the mortgage in arrears with no one having the power to foreclose—a situation that can make the land inalienable. At the same time, it undermines the public recording system by making transfers of mortgages no longer a matter of public record.
In addition, the court noted that Rhode Island (like Massachusetts and some other eastern states) are “title theory” states where the mortgagee hold title to the property until the mortgage is discharged. In addition, the court noted that the mortgage gives the mortgagee the power to foreclose. Since the mortgagee was MERS and MERS had assigned the mortgage to Porch Swing Holdings, it had the power to foreclose. The mortgage was enough; the note was not needed to show a right to foreclose.