Lost Note, No Bar: Rhode Island Reaffirms Mortgagee’s Power to Foreclose Without Possessing the Note and Limits UCC § 6A-3-309 to Note Enforcement

Introduction

In Porch Swing Holdings LLC v. Wayne A. Mallory et al. (No. 2024-108-Appeal, PM 22-3320), decided November 6, 2025, the Supreme Court of Rhode Island reaffirmed and clarified a central feature of Rhode Island’s foreclosure jurisprudence: a mortgagee may foreclose without possessing the underlying promissory note, even when the note has been lost and the foreclosing mortgagee never possessed it. The Court held that the right to exercise the power of sale is derived from the mortgage contract and Rhode Island’s title-theory framework, not from possession of or entitlement to enforce the note. It further held that the Uniform Commercial Code’s lost-instrument provision (G.L. 1956 § 6A-3-309) governs enforcement of the note as an instrument, not the separate remedy of foreclosure under a mortgage.

The case arose from a 2006 second mortgage executed by Wayne and Linda Mallory in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Sovereign Bank, with the familiar MERS language vesting “power of sale” in MERS and its successors and assigns. After assignments, Porch Swing Holdings acquired the mortgage. The original promissory note, executed to Sovereign Bank, was lost; Porch Swing never possessed it. When the Mallorys defaulted, Porch Swing sued to foreclose. The Superior Court granted summary judgment for Porch Swing. On appeal, the Mallorys argued that, under § 6A-3-309 and other authorities, only the party who lost the note could enforce it, and that foreclosure could not proceed absent the mortgagee’s possession of the note or status as a person entitled to enforce the note.

The Supreme Court rejected those arguments and affirmed the order granting summary judgment. It also addressed important procedural issues: although a final judgment had been entered below despite unresolved claims against other defendants, the Court exercised interlocutory jurisdiction under § 9-24-7 (orders for the sale of real property) and directed the Superior Court to vacate the final judgment to comply with Rules 54(b) and 58.

Summary of the Opinion

The Court affirmed the Superior Court’s grant of summary judgment authorizing foreclosure. The Mallorys did not dispute default, nor did they challenge that Porch Swing held the mortgage by assignment.
The Court reiterated, consistent with Bucci v. Lehman Brothers Bank, FSB, 68 A.3d 1069 (R.I. 2013), Breggia v. MERS, 102 A.3d 636 (R.I. 2014), Pimentel v. Deutsche Bank National Trust Co., 174 A.3d 740 (R.I. 2017), and Ocwen Loan Servicing, LLC v. Medina, 247 A.3d 140 (R.I. 2021), that a mortgagee “need not hold the note in order to foreclose on a property.”
The UCC’s lost-instrument statute, § 6A-3-309, governs who may enforce a note as an instrument; it does not constrain a mortgagee’s ability to foreclose under the mortgage. Foreclosure rights derive from contract and title-theory, not from note possession.
Arguments premised on § 34-11-21 (the “statutory condition” incorporated by reference in mortgages) did not alter the analysis; that provision does not require the foreclosing mortgagee to hold or own the note.
Any misstatement in the trial justice’s bench decision implying that Porch Swing held the note was immaterial; the controlling legal rule renders note possession irrelevant to foreclosure in Rhode Island.
Procedurally, the Court held the appeal properly before it as an interlocutory order “concerning the sale of real property” under § 9-24-7. It directed the Superior Court to vacate the “final judgment” because claims remained against two other defendants, thereby preserving the interlocutory status consistent with Rules 54(b) and 58.

Analysis

Precedents Cited and Their Influence

Bucci v. Lehman Brothers Bank, FSB (2013)

Bucci is the cornerstone. There, the Court upheld the validity of MERS acting as mortgagee and “nominee” for the lender with the contractual “power of sale.” The Court held that borrowers had expressly granted MERS (and its successors and assigns) the right to foreclose and that this right flowed from the contract, not dependent on MERS possessing the note. Bucci also emphasized Rhode Island’s title-theory: a mortgage conveys legal title to the mortgagee, subject to defeasance upon payment.

Breggia v. MERS (2014)

Breggia reiterated that the mortgage and note may be separated, and that MERS, as mortgagee with power of sale, could foreclose “even without the original note holder.” This case is directly on point: the Court again accepts that the right to foreclose is not contingent upon note possession or unity between the noteholder and mortgagee.

Pimentel v. Deutsche Bank National Trust Co. (2017)

Pimentel expressly addressed and rejected the borrower’s argument that a foreclosing mortgagee must possess the note. The Court stated it had “repeatedly said in a long line of cases stemming from Bucci [that] a mortgagee need not hold the note in order to foreclose on a property.” Pimentel also supplies the summary-judgment framework frequently cited in foreclosure cases.

Ocwen Loan Servicing, LLC v. Medina (2021) and Note Capital Group, Inc. v. Perretta (2019)

These decisions establish the jurisdictional pathway used here: orders authorizing foreclosure or confirming judicial foreclosure can be treated as interlocutory orders “concerning the sale of real property,” making them appealable under § 9-24-7. They also reinforce the substantive rule that note possession is not a prerequisite to foreclosure in Rhode Island.

Other Authorities

Mruk v. MERS (2013), Moura v. MERS (2014), Genao v. Litton Loan Servicing (2015): Provide the summary judgment standards and caution that mere factual disputes are insufficient absent genuine disputes of material fact.
Hebert v. City of Woonsocket (2019), Twenty Eleven, LLC v. Botelho (2015): Reinforce principles of statutory construction—plain language controls, which the Court applied to § 6A-3-309.

Legal Reasoning

The Court proceeded in three key steps:

Title-theory and contractual power of sale govern foreclosure rights. Rhode Island is a title-theory state; thus, the mortgage conveys legal title to the mortgagee, subject to defeasance. The mortgage here expressly granted MERS (as nominee for the lender and its successors and assigns) the “power of sale.” Once assigned, Porch Swing stood in the shoes of the mortgagee, with all attendant rights. As Bucci and Breggia teach, the power of sale is a contractual right the borrower granted, not contingent on the mortgagee’s possession of the note.
Separation of note and mortgage is permissible, and note possession is irrelevant to foreclosure. Relying on Bucci, Breggia, Pimentel, and Medina, the Court reaffirmed that the note and mortgage may be separated and that the mortgagee may foreclose irrespective of whether it holds the note. The borrower’s default on the debt, plus the mortgagee’s status and contractual rights, are the legally relevant predicates.
UCC § 6A-3-309 (lost note) does not bar foreclosure. The Court carefully limited § 6A-3-309 to its domain—enforcement of a negotiable instrument. The plaintiff sought to foreclose under the mortgage, not to enforce the note by judgment. Because § 6A-3-309 regulates who can sue on the note when it is lost, it has no bearing on the separate remedy of exercising the mortgage’s power of sale.

The Court also dispatched two additional arguments:

Statutory Condition (§ 34-11-21). Defendants’ reliance on the statutory condition language was unavailing. That provision, which many mortgages incorporate by reference, does not impose a requirement that the foreclosing mortgagee own or possess the note. It describes the condition for defeasance and voidness upon payment; it does not alter Rhode Island’s rule that mortgagees may foreclose without the note.
Trial justice’s references to note possession. Even if the bench decision contained statements implying note possession, those statements were immaterial. Given the governing rule that note possession is not required, any such factual disagreement is not “material” and cannot defeat summary judgment.

Statutory Provisions Clarified

G.L. 1956 § 6A-3-309 (UCC lost instruments): Applies to enforcement of the note itself. It does not constrain foreclosure under a mortgage by a mortgagee who does not possess the note and may never have possessed it.
G.L. 1956 § 34-11-21 (Statutory condition): Does not require the foreclosing party to be the noteholder; it describes conditions under which the mortgage becomes void upon performance.
G.L. 1956 § 9-24-7 (Interlocutory appeals—orders for sale): Provides appellate jurisdiction over interlocutory orders directing or concerning the sale of real property. The Court used this to reach the merits despite the absence of a Rule 54(b) final judgment.

Procedural Posture and Appellate Practice

The Superior Court granted summary judgment for Porch Swing and entered a written order declaring its entitlement to foreclose pursuant to § 34-27-1 et seq., “subject to an Order of Sale.” However, two defendants remained in the case. Under Rule 54(b), entry of a final judgment disposing of less than all claims/parties is improper absent an express determination and direction; Rule 58(a)(2) requires a separate judgment document. The Supreme Court cured this by:

Exercising interlocutory jurisdiction under § 9-24-7, consistent with Perretta and Medina, because the order concerns the sale of real property;
Affirming the order granting summary judgment in substance;
Directing the Superior Court to vacate the final judgment entry to restore the matter to an interlocutory posture while proceedings continue as to the remaining defendants and any necessary order of sale issues.

Impact

On Rhode Island Foreclosure Practice

Lost-note defenses are narrowed. Borrowers cannot block foreclosure by arguing that the mortgagee never possessed the note or that the note was lost by someone else. The UCC’s lost-instrument rules do not bar foreclosure.
Separation of note and mortgage reaffirmed. Lenders and assignees can structure transfers so that the mortgagee of record (or its assignee) conducts foreclosure, even if a different entity holds or once held the note.
MERS language remains effective. Mortgages conferring “power of sale” on MERS “as nominee for Lender and Lender’s successors and assigns” continue to support foreclosure by MERS or its assignees.
Proof burdens at summary judgment remain focused. The material facts are default, proper assignment of the mortgage, and the contractual power of sale. Note possession is not a material fact in Rhode Island.

On Note Enforcement and Deficiencies

Separate regimes, separate rights. This decision does not authorize a non-note-holder to sue on the note or to collect a deficiency. Enforcement of the note still requires status as a “person entitled to enforce” under UCC § 3-301, and the lost-instrument rule in § 6A-3-309 restricts who may enforce a lost note (in Rhode Island’s current formulation, generally the party who lost it).
Post-sale litigation planning. Entities that foreclose without holding the note should consider how any deficiency would be pursued, if at all, and ensure coordination with the person entitled to enforce the note to avoid duplicative or inconsistent claims.

Risk Management and Documentation

Assignments and record clarity. Maintain clear, recorded chains of mortgage assignments to the foreclosing entity. The Court’s analysis presumes a clean assignment chain and unchallenged status as mortgagee.
Contract drafting. Preserve robust “power of sale” language and MERS nominee language (if used) to ensure contractual authority is explicit.
Evidence of default. Assemble reliable account histories and affidavits to meet summary judgment burdens; with note possession off the table, default evidence is central.

Comparative Perspective

Rhode Island’s approach diverges from jurisdictions that require unity of the note and mortgage or proof that the foreclosing party is a “person entitled to enforce” the note. Practitioners should avoid importing out-of-state “show me the note” arguments into Rhode Island litigation; the Bucci line remains controlling.

Complex Concepts Simplified

Title-theory vs. lien-theory: In title-theory states (like Rhode Island), the mortgage conveys legal title to the mortgagee, subject to defeasance upon repayment. This helps explain why the mortgagee can exercise the power of sale based on the mortgage alone.
Power of sale: A contractual clause granting the mortgagee the right to sell the property upon default, without first obtaining a money judgment on the note. In Rhode Island, this power can be exercised by the mortgagee or its assignees regardless of note possession.
MERS: Mortgage Electronic Registration Systems, Inc. often serves as mortgagee of record as “nominee” for lenders and their successors, with power of sale. Rhode Island recognizes MERS’s status and authority under such contracts.
Note vs. mortgage: The note is the borrower’s promise to pay; the mortgage secures that promise with an interest in real property. They are distinct instruments and can be held by different entities.
Lost-note rule (UCC § 6A-3-309): Governs who may enforce a lost negotiable instrument. In Rhode Island’s statute, enforcement is generally limited to the party who lost the note and was entitled to enforce it when the loss occurred. This affects lawsuits on the note, not foreclosure under a mortgage.
Summary judgment: A mechanism to resolve cases without trial when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Disputes about immaterial facts (like note possession, under Rhode Island law) do not preclude summary judgment.
Interlocutory appeal of sale orders: Under § 9-24-7, orders directing or concerning the sale of real property are immediately appealable, even if other claims remain unresolved.
Statutory condition (§ 34-11-21): A default condition embedded by reference in many mortgages; it describes when the mortgage becomes void upon payment, not who may foreclose.

Conclusion

Porch Swing Holdings v. Mallory solidifies Rhode Island’s modern foreclosure doctrine. It reaffirms that:

The mortgagee’s right to foreclose arises from the mortgage contract and Rhode Island’s title-theory, not from possession of the note;
Foreclosure may proceed even if the note is lost and the foreclosing mortgagee never possessed it;
The UCC’s lost-instrument statute, § 6A-3-309, regulates enforcement of the note, not the mortgage foreclosure remedy;
Statutory and procedural guardrails (Rules 54(b), 58, and § 9-24-7) must be observed in structuring and appealing foreclosure orders.

For lenders and their assignees, the decision provides certainty: a properly assigned mortgage with an express power of sale may be foreclosed notwithstanding lost-note complications. For borrowers, it clarifies that note-possession challenges will not forestall foreclosure, although defenses and claims related to the note itself remain governed by the UCC. In the broader legal context, the decision maintains the coherence of Rhode Island’s Bucci line, keeping contractual power of sale at the center of foreclosure law and cabining the lost-note doctrine to its proper sphere.