Quote: James said:If a state has specific legal requirements as to the level of authority acceptable for executing instruments affecting real estate, and the original lender's signator on the indorsement in blank failed to meet such level of authority, would this void the indorsement? And if it did void the indorsement, would that make the note void or voidable?
The promissory note, as a negotiable instrument, is not usually an instrument affecting interests in real estate as those terms are usually defined in the statute of frauds. Bear in mind that the very same law (UCC) that controls promissory note indorsements also covers indorsement of sight drafts -- checks -- which clear through the banking system every day. What is necessary in your state to validly indorse a check?
Usually, all that is required is a valid signature and even an invalid signature seems to often do under the UCC. Check the cases for your jurisdiction!
The validity of an indorsement would not typically affect the validity of the note AT ALL. It would oly control who might be a valid holder with a right to enforce the instrument.
An invalid indorsement would essentially never void an otherwise valid negotiable instrument. Nor would it make such an instrument voidable. But if the indorsement was invalid, it certainly could implicate the right of the person seeking to enforce the instrument to have standing to bring an action as the holder.
Quote: James said:
Added to this, what if that original lender also failed to meet state licensing requirements at the time of closing? What would be the likely status of the note?
It is extremely UNLIKELY that state licensing laws would implicate the validity of an otherwise valid negotiable instrument. But check the statutory language of the law in your jurisdiction and the cases relating to those licensing laws.This issue has been discussed before in other threads. It is most unproductive as a means of defense, EXCEPT perhaps to raise as an additional issue in a "clean hands" equitable defense. Even so, usually the holder in due course immunity is usually going to preclude an effective assertion of this as something sinister by the mortgage investor obtaining the note without protest and not in default before the licensing issue is asserted or brought to its attention.