Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
Articles |The FORUM |Law Library |Videos | Fraudsters & Co. |File Complaints |How they STEAL |Search MSFraud |Contact Us
If a note is signed in blank, it is completely blank or does it have an authorized signature from the original "closing lender" with only the line after "Pay to the order of" left blank?
Quote 0 0
William A. Roper, Jr.
Sandy said:
If a note is signed in blank, it is completely blank or does it have an authorized signature from the original "closing lender" with only the line after "Pay to the order of" left blank?

Sandy, it can be either. 

Think of how checks are usually indorsed.  Checks are covered by the same article of the UCC Article , Article III (negotiable instruments), as promissory notes, and a LOT of the older case law on negotiable instruments concerns checks.

Most people today would simply indorse a check by signing their name only and then presenting the check to their bank for deposit.  Others use a more restrictive indorsement.  (I usually out of habit write "For Deposit Only with my account number".)

In times when it was less universal for most folks to have at least one bank checking account, it would have been more common for a person without such an account to indorse the check in favor of someone else.  For example, one could have taken a weekly paycheck and indorsed it in favor of one's landlord, by writing "Pay To John SMITH".  Or a smaller check might have been negotiated in favor of a merchant with whom one maintained an account.

In smaller communities, their might have been no bank at all to either deposit or to cash checks.  And where a large portion of the population lacked bank checking accounts, a check from a reputable maker might have circulated for some time in lieu of cash before being presented to a bank for payment.

One little understood aspect of indorsement is that in indorsing a check without a more restrictive indorsement, one makes oneself liable as a guarantor of the check.

There is a common sense aspect to this.  If I indorsed a check in favor of the grocer and the maker failed to make good on the check, the grocer still wants to get paid and looks to ME to make good on that check even as he might have a right of action against the more remote maker (who might be unknown to the grocer).

There are two ways for an intermediate holder to AVOID this liability.  First, if one indorses the check "For To John SMITH, Without Recourse", one cannot usually be held liable for non-payment by the maker or by other indorsers.  (There would usually be an exception for collusive fraud, such as where I conspire with a fictitious maker or a forger, etc.)

The other way to avoid liability is when the intermediate holder takes the instrument indorsed in blank and thereafter effects negotiation by delivery alone.  In this instance, the intermediate holder has never indorsed the instrument AT ALL and while a holder CANNOT be described as an indorsor.


A secondary reason is avoid the situation where an anomalous intermediate indorsement calls into question the validity of subsequent negotiations.


So a valid indorsement would usually consist of a signature alone, in the case of an individual person OR a signature of an individual with additional words showing that this person is signing on behalf of the payee or prior indorsee as a person with authority.  But it would be more common to see a blank indorsemnt of a promissory note say something like "Pay To ________, Without Recourse."

You should ALWAYS look to the black letter law and the cases of your jurisdiction OR. often more correctly, the law of the place of delivery of the instrument, to ascertain the precise legal requirements of a valid negotiation, though these are fairly uniform nationally, EXCEPT FOR the use of allonges.
Quote 0 0
Write a reply...