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Evidences of Indebtedness Secured by a Mortgage or Deed of Trust
Mortgage Notes
Secured Debt

Statute: § 551.202(11), Wis. Stats.

Used for:  Transaction in a note or other evidence of indebtedness secured by a mortgage or deed of trust or by an agreement for the sale of real estate or chattels.

Note:  The entire mortgage, deed of trust or agreement, together with all of the evidences of indebtedness secured thereby, must be offered and sold as a unit (not fractionalized.) Thus for instance, a $100,000 first mortgage on a property cannot be used to secure two separate $50,000 notes to different persons and qualify for use of the exemption.

Filing requirement: Self-Executing. No filing or Consent to Service of Process is necessary in order to claim this exemption.

Frequently asked questions:

Q: Is this exemption self-executing?

    A:  Yes.  No filing or Consent to Service of Process is necessary in order to claim this exemption.

Q: Can advertising (such as a newspaper ad) be used?

    A:  No. The exemption does not permit any general solicitation or general advertisement.

Important interpretive letters:

7/14/89 letter re:  Creative Mortgages & Credit Services, Inc.  The language "as a unit" means that each separate and distinct mortgage (whether it is a first, second, third, etc.) cannot cover more than one separate mortgage note.  Thus, for example, a first mortgage on a $100,000 piece of real estate cannot serve as collateral for 5 separate $20,000 notes and still qualify for this exemption.  Stated another way, in order to use this exemption, a single mortgage cannot be "fractionalized" to cover multiple evidences of debt/notes, etc.

History:  Predecessor statute 551.23(5), Wis. Stats., adopted January 1, 1970.  Identical to Uniform Securities Act of 1956 § 402(b)(5). Repealed and recreated effective January 1, 2009.


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