IV. Lender's Defenses

• Library: South Carolina Foreclosure Law Manual (2021 Ed.)

IV. Lender's Defenses

A. Holder in Due Course

A foreclosure plaintiff may claim to be holders in due course.¹⁹⁸ Mortgage loan documents, however, are often not transferred by endorsement on the note, which is necessary to make one a "holder."¹⁹⁹ If any transferee did not take by endorsement, it and later owners are not "holders."²⁰⁰

In response to a counterclaim, a foreclosure plaintiff has the burden of proving it is a holder in due course it is pleads such status as a defense to the counterclaim. As noted in Rosemond,

A person taking a negotiable instrument as a "holder in due course" takes it free from all claims to it on the part of any person and free from all "personal" defenses of any party to the instrument with whom the holder has not dealt.
. . .
A "holder in due course" is a person who is a holder of a negotiable instrument, who took it for value, in good faith, without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person.²⁰¹

Status as a holder in due course is an affirmative defense, to be raised by the holder, to defenses and counterclaims raised by a defendant in an action by the holder of a note. South Carolina's version of the Uniform Commercial Code so provides, as follows:

If a defense or claim in recoupment is

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