written assignment of the mortgage

• Bankruptcy Basics
• Chapter 11 Bankruptcy
• Chapter 13 Bankruptcy
• Chapter 7 Bankruptcy
• Debt Collectors and Consumer Rights
• Divorce and Bankruptcy
• Going to Court
• Property & Exemptions
• Student Loans
• Taxes and Bankruptcy
• Wage Garnishment

Understanding the Assignment of Mortgages: What You Need To Know

3 minute read • Upsolve is a nonprofit that helps you get out of debt with education and free debt relief tools, like our bankruptcy filing tool.  Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card.  Explore our free tool

A mortgage is a legally binding agreement between a home buyer and a lender that dictates a borrower's ability to pay off a loan. Every mortgage has an interest rate, a term length, and specific fees attached to it.

Written by Attorney Todd Carney .  Updated November 26, 2021

If you’re like most people who want to purchase a home, you’ll start by going to a bank or other lender to get a mortgage loan. Though you can choose your lender, after the mortgage loan is processed, your mortgage may be transferred to a different mortgage servicer . A transfer is also called an assignment of the mortgage. 

No matter what it’s called, this change of hands may also change who you’re supposed to make your house payments to and how the foreclosure process works if you default on your loan. That’s why if you’re a homeowner, it’s important to know how this process works. This article will provide an in-depth look at what an assignment of a mortgage entails and what impact it can have on homeownership.

Assignment of Mortgage – The Basics

When your original lender transfers your mortgage account and their interests in it to a new lender, that’s called an assignment of mortgage. To do this, your lender must use an assignment of mortgage document. This document ensures the loan is legally transferred to the new owner. It’s common for mortgage lenders to sell the mortgages to other lenders. Most lenders assign the mortgages they originate to other lenders or mortgage buyers.

Home Loan Documents

When you get a loan for a home or real estate, there will usually be two mortgage documents. The first is a mortgage or, less commonly, a deed of trust . The other is a promissory note. The mortgage or deed of trust will state that the mortgaged property provides the security interest for the loan. This basically means that your home is serving as collateral for the loan. It also gives the loan servicer the right to foreclose if you don’t make your monthly payments. The promissory note provides proof of the debt and your promise to pay it.

When a lender assigns your mortgage, your interests as the mortgagor are given to another mortgagee or servicer. Mortgages and deeds of trust are usually recorded in the county recorder’s office. This office also keeps a record of any transfers. When a mortgage is transferred so is the promissory note. The note will be endorsed or signed over to the loan’s new owner. In some situations, a note will be endorsed in blank, which turns it into a bearer instrument. This means whoever holds the note is the presumed owner.

Using MERS To Track Transfers

Banks have collectively established the Mortgage Electronic Registration System , Inc. (MERS), which keeps track of who owns which loans. With MERS, lenders are no longer required to do a separate assignment every time a loan is transferred. That’s because MERS keeps track of the transfers. It’s crucial for MERS to maintain a record of assignments and endorsements because these land records can tell who actually owns the debt and has a legal right to start the foreclosure process.

Upsolve Member Experiences

Assignment of Mortgage Requirements and Effects

The assignment of mortgage needs to include the following:

The original information regarding the mortgage. Alternatively, it can include the county recorder office’s identification numbers. 

The borrower’s name.

The mortgage loan’s original amount.

The date of the mortgage and when it was recorded.

Usually, there will also need to be a legal description of the real property the mortgage secures, but this is determined by state law and differs by state.

Notice Requirements

The original lender doesn’t need to provide notice to or get permission from the homeowner prior to assigning the mortgage. But the new lender (sometimes called the assignee) has to send the homeowner some form of notice of the loan assignment. The document will typically provide a disclaimer about who the new lender is, the lender’s contact information, and information about how to make your mortgage payment. You should make sure you have this information so you can avoid foreclosure.

Mortgage Terms

When an assignment occurs your loan is transferred, but the initial terms of your mortgage will stay the same. This means you’ll have the same interest rate, overall loan amount, monthly payment, and payment due date. If there are changes or adjustments to the escrow account, the new lender must do them under the terms of the original escrow agreement. The new lender can make some changes if you request them and the lender approves. For example, you may request your new lender to provide more payment methods.

Taxes and Insurance

If you have an escrow account and your mortgage is transferred, you may be worried about making sure your property taxes and homeowners insurance get paid. Though you can always verify the information, the original loan servicer is responsible for giving your local tax authority the new loan servicer’s address for tax billing purposes. The original lender is required to do this after the assignment is recorded. The servicer will also reach out to your property insurance company for this reason.  

If you’ve received notice that your mortgage loan has been assigned, it’s a good idea to reach out to your loan servicer and verify this information. Verifying that all your mortgage information is correct, that you know who to contact if you have questions about your mortgage, and that you know how to make payments to the new servicer will help you avoid being scammed or making payments incorrectly.

Let's Summarize…

In a mortgage assignment, your original lender or servicer transfers your mortgage account to another loan servicer. When this occurs, the original mortgagee or lender’s interests go to the next lender. Even if your mortgage gets transferred or assigned, your mortgage’s terms should remain the same. Your interest rate, loan amount, monthly payment, and payment schedule shouldn’t change. 

Your original lender isn’t required to notify you or get your permission prior to assigning your mortgage. But you should receive correspondence from the new lender after the assignment. It’s important to verify any change in assignment with your original loan servicer before you make your next mortgage payment, so you don’t fall victim to a scam.

Attorney Todd Carney

Attorney Todd Carney is a writer and graduate of Harvard Law School. While in law school, Todd worked in a clinic that helped pro-bono clients file for bankruptcy. Todd also studied several aspects of how the law impacts consumers. Todd has written over 40 articles for sites such... read more about Attorney Todd Carney

Continue reading and learning!

It's easy to get debt help

Choose one of the options below to get assistance with your debt:

Considering Bankruptcy?

Our free tool has helped 13,759+ families file bankruptcy on their own. We're funded by Harvard University and will never ask you for a credit card or payment.

Private Attorney

Get a free evaluation from an independent law firm.

Learning Center

Research and understand your options with our articles and guides.

Already an Upsolve user?

Bankruptcy Basics ➜

• What Is Bankruptcy?
• Every Type of Bankruptcy Explained
• How To File Bankruptcy for Free: A 10-Step Guide
• Can I File for Bankruptcy Online?

Chapter 7 Bankruptcy ➜

• What Are the Pros and Cons of Filing Chapter 7 Bankruptcy?
• What Is Chapter 7 Bankruptcy & When Should I File?
• Chapter 7 Means Test Calculator

Wage Garnishment ➜

• How To Stop Wage Garnishment Immediately

Property & Exemptions ➜

• What Are Bankruptcy Exemptions?
• Chapter 7 Bankruptcy: What Can You Keep?
• Yes! You Can Get a Mortgage After Bankruptcy
• How Long After Filing Bankruptcy Can I Buy a House?
• Can I Keep My Car If I File Chapter 7 Bankruptcy?
• Can I Buy a Car After Bankruptcy?
• Should I File for Bankruptcy for Credit Card Debt?
• How Much Debt Do I Need To File for Chapter 7 Bankruptcy?
• Can I Get Rid of my Medical Bills in Bankruptcy?

Student Loans ➜

• Can You File Bankruptcy on Student Loans?
• Can I Discharge Private Student Loans in Bankruptcy?
• Navigating Financial Aid During and After Bankruptcy: A Step-by-Step Guide
• Filing Bankruptcy to Deal With Your Student Loan Debt? Here Are 3 Things You Should Know!

Debt Collectors and Consumer Rights ➜

• 3 Steps To Take if a Debt Collector Sues You
• How To Deal With Debt Collectors (When You Can’t Pay)

Taxes and Bankruptcy ➜

• What Happens to My IRS Tax Debt if I File Bankruptcy?
• What Happens to Your Tax Refund in Bankruptcy

Chapter 13 Bankruptcy ➜

• Chapter 7 vs. Chapter 13 Bankruptcy: What’s the Difference?
• Why is Chapter 13 Probably A Bad Idea?
• How To File Chapter 13 Bankruptcy: A Step-by-Step Guide
• What Happens When a Chapter 13 Case Is Dismissed?

Going to Court ➜

• Do You Have to Go To Court to File Bankruptcy?
• Telephonic Hearings in Bankruptcy Court

Divorce and Bankruptcy ➜

• How to File Bankruptcy After a Divorce
• Chapter 13 and Divorce

Chapter 11 Bankruptcy ➜

• Chapter 7 vs. Chapter 11 Bankruptcy
• Reorganizing Your Debt? Chapter 11 or Chapter 13 Bankruptcy Can Help!

State Guides ➜

• Connecticut
• District Of Columbia
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• West Virginia

Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families resolve their debt and fix their credit using free software tools. Our team includes debt experts and engineers who care deeply about making the financial system accessible to everyone. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations.

To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.

• Find a Lawyer
• Ask a Lawyer
• Research the Law
• Law Schools
• Laws & Regs
• Newsletters
• Justia Connect
• Pro Membership
• Basic Membership
• Justia Lawyer Directory
• Platinum Placements
• Gold Placements
• Justia Elevate
• Justia Amplify
• PPC Management
• Google Business Profile
• Social Media
• Justia Onward Blog
• The Legally Invalid Assignment Defense to Foreclosure

People who are facing the possibility of a foreclosure on their home may want to investigate the history of their mortgage. If the assignment to the foreclosing party is not valid, this may be a viable defense to a foreclosure. In some states, you can demand that the foreclosing party produce a written assignment of the mortgage. If it does not have an assignment or failed to record it as required by state law, this may result in the dismissal of the foreclosure action. Recording rules may require that the foreclosing party record the assignment before starting the foreclosure.

Courts in other states are more lenient in their review of assignments. Since the mortgage is closely associated with the promissory note, the foreclosing party may be allowed to enforce the promissory note even if it cannot produce a valid assignment of the mortgage. You should seek legal guidance in your state to determine whether this defense may be viable.

Homeowners who believe that they may have a defense based on an invalid assignment may wish to consult with a knowledgeable foreclosure lawyer, since this defense can become complicated. Justia offers a lawyer directory to simplify researching, comparing, and contacting attorneys who fit your legal needs.

The Relationship Between Mortgages and Promissory Notes

The mortgage and the promissory note are the two key documents attached to a loan for buying a home. Some purchases involve a deed of trust rather than a mortgage, but they are functionally equivalent in this context. While the promissory note is your guarantee to repay the loan, the mortgage gives the lender the right to foreclose if you do not repay the loan as arranged. The mortgage also identifies the property that will serve as security for the loan. Thus, the two documents work together in establishing the lender’s rights.

The Role of Mortgage Assignments in Loan Transfers

A bank or other lender often will sell a mortgage to another party, which will collect payments and pursue the homeowner if they fail to keep up with the mortgage. To transfer the loan, the original lender will endorse the promissory note to the new owner of the mortgage. This is because collection efforts hinge on owning the promissory note. If the foreclosing party cannot produce the promissory note, the homeowner will have a defense to the foreclosure.

Meanwhile, the new owner will record the assignment of the mortgage. This includes transferring the right to foreclose, as provided by the mortgage, to the new owner. The assignment will provide the amount of the mortgage and the names of the homeowner, the original lender, and the new owner of the mortgage. It also will contain a description of the property attached to the mortgage and the date when the mortgage took effect.

An invalid assignment defense may only be a temporary solution until the new owner records an assignment in their name.

The mortgage industry uses a tool known as the Mortgage Electronic Registration System (MERS) to keep track of assignments. MERS may be a nominee for the lender, or it may receive the mortgage as an assignment. If MERS is the current assignee, it cannot pursue a foreclosure because it does not have an interest in the promissory note. MERS simply serves as an agent for the current owner of the mortgage and assists in creating a record for transfers of the mortgage. This allows banks to more easily transfer loans among them without creating a new assignment each time. You may have a defense against a foreclosure action if MERS is listed as the owner of the mortgage. However, this likely will be only a temporary solution until the new owner records an assignment in their name.

Last reviewed October 2023

Foreclosure Law Center Contents   

• Foreclosure Law Center
• Errors and Abuses by Mortgage Servicers & Your Legal Rights
• Foreclosure Trustees & Their Legal Obligations
• Strict Foreclosure Laws
• Expedited Foreclosure Laws & Procedures
• Tax Debt Leading to Foreclosure & Legal Concerns
• Homeowners' Association Liens Leading to Foreclosure & Other Legal Concerns
• Timeshare Foreclosures & the Legal Process
• Investment Property Foreclosures & Your Legal Options
• Manufactured Home Foreclosures & Relevant Legal Concerns
• The Right of Redemption Before and After a Foreclosure Sale Under the Law
• Reinstatement and Payoff to Prevent Foreclosure & Your Legal Rights
• Fannie Mae and Freddie Mac Foreclosure Prevention Strategies
• Divorce and Foreclosure Prevention — Legal & Practical Considerations
• Natural Disasters and Legal Options for Foreclosure Prevention
• Federal Mortgage Servicing Laws Protecting Homeowners
• Fighting a Foreclosure — Legal Options and Issues
• Homeowners' Legal Rights Before, During, and After Foreclosure
• How Liens and Second Mortgages May Legally Affect Foreclosure
• Foreclosure Scams — Legal Concerns & Consumer Protections
• Judicial vs. Non-Judicial Foreclosure Under the Law
• Fighting a Foreclosure in Court & Legal Strategies
• Delaying a Foreclosure
• The Statute of Limitations Defense Under Foreclosure Law
• Using the Legally Defective Affidavit or Declaration Defense to Foreclosure
• Setting Aside a Foreclosure Sale
• Challenging Fees in Foreclosure
• Mortgage Servicing Rules, the FDCPA, and Your Legal Rights
• Working With a Foreclosure Lawyer
• Alternatives to Foreclosure — Legal & Financial Considerations
• Foreclosure Laws and Procedures: 50-State Survey
• Foreclosure Law FAQs for Consumers
• Find a Foreclosure Defense Lawyer

Related Areas   

• Home Ownership Legal Center
• Bankruptcy Law Center
• Debt Relief & Management Legal Center
• Consumer Protection Law Center
• Landlord - Tenant Law Center
• Related Areas
• Bankruptcy Lawyers
• Business Lawyers
• Criminal Lawyers
• Employment Lawyers
• Estate Planning Lawyers
• Family Lawyers
• Personal Injury Lawyers
• Estate Planning
• Personal Injury
• Business Formation
• Business Operations
• Intellectual Property
• International Trade
• Real Estate
• Financial Aid
• Course Outlines
• Law Journals
• US Constitution
• Regulations
• Supreme Court
• Circuit Courts
• District Courts
• Dockets & Filings
• State Constitutions
• State Codes
• State Case Law
• Legal Blogs
• Business Forms
• Product Recalls
• Justia Connect Membership
• Justia Premium Placements
• Justia Elevate (SEO, Websites)
• Justia Amplify (PPC, GBP)
• Testimonials

• Find a Lawyer
• Legal Topics
• Real Estate Law

Mortgage Assignment Laws and Definition

(This may not be the same place you live)

  What is a Mortgage Assignment?

A mortgage is a legal agreement. Under this agreement, a bank or other lending institution provides a loan to an individual seeking to finance a home purchase. The lender is referred to as a creditor. The person who finances the home owes money to the bank, and is referred to as the debtor.

To make money, the bank charges interest on the loan. To ensure the debtor pays the loan, the bank takes a security interest in what the loan is financing — the home itself. If the buyer fails to pay the loan, the bank can take the property through a foreclosure proceeding.

There are two main documents involved in a mortgage agreement. The document setting the financial terms and conditions of repayment is known as the mortgage note. The bank is the owner of the note. The note is secured by the mortgage. This means if the debtor does not make payment on the note, the bank may foreclose on the home. 

The document describing the mortgaged property is called the mortgage agreement. In the mortgage agreement, the debtor agrees to make payments under the note, and agrees that if payment is not made, the bank may institute foreclosure proceedings and take the home as collateral .

An assignment of a mortgage refers to an assignment of the note and assignment of the mortgage agreement. Both the note and the mortgage can be assigned. To assign the note and mortgage is to transfer ownership of the note and mortgage. Once the note is assigned, the person to whom it is assigned, the assignee, can collect payment under the note. 

Assignment of the mortgage agreement occurs when the mortgagee (the bank or lender) transfers its rights under the agreement to another party. That party is referred to as the assignee, and receives the right to enforce the agreement’s terms against the assignor, or debtor (also called the “mortgagor”). 

What are the Requirements for Executing a Mortgage Assignment?

What are some of the benefits and drawbacks of mortgage assignments, are there any defenses to mortgage assignments, do i need to hire an attorney for help with a mortgage assignment.

For a mortgage to be validly assigned, the assignment document (the document formally assigning ownership from one person to another) must contain:

• The current assignor name.
• The name of the assignee.
• The current borrower or borrowers’ names. 
• A description of the mortgage, including date of execution of the mortgage agreement, the amount of the loan that remains, and a reference to where the mortgage was initially recorded. A mortgage is recorded in the office of a county clerk, in an index, typically bearing a volume or page number. The reference to where the mortgage was recorded should include the date of recording, volume, page number, and county of recording.
• A description of the property. The description must be a legal description that unambiguously and completely describes the boundaries of the property.

There are several types of assignments of mortgage. These include a corrective assignment of mortgage, a corporate assignment of mortgage, and a mers assignment of mortgage. A corrective assignment corrects or amends a defect or mistake in the original assignment. A corporate assignment is an assignment of the mortgage from one corporation to another. 

A mers assignment involves the Mortgage Electronic Registration System (MERS). Mortgages often designate MERS as a nominee (agent for) the lender. When the lender assigns a mortgage to MERS, MERS does not actually receive ownership of the note or mortgage agreement. Instead, MERS tracks the mortgage as the mortgage is assigned from bank to bank. 

An advantage of a mortgage assignment is that the assignment permits buyers interested in purchasing a home, to do so without having to obtain a loan from a financial institution. The buyer, through an assignment from the current homeowner, assumes the rights and responsibilities under the mortgage. 

A disadvantage of a mortgage assignment is the consequences of failing to record it. Under most state laws, an entity seeking to institute foreclosure proceedings must record the assignment before it can do so. If a mortgage is not recorded, the judge will dismiss the foreclosure proceeding. 

Failure to observe mortgage assignment procedure can be used as a defense by a homeowner in a foreclosure proceeding. Before a bank can institute a foreclosure proceeding, the bank must record the assignment of the note. The bank must also be in actual possession of the note. 

If the bank fails to “produce the note,” that is, cannot demonstrate that the note was assigned to it, the bank cannot demonstrate it owns the note. Therefore, it lacks legal standing to commence a foreclosure proceeding.

If you need help with preparing an assignment of mortgage, you should contact a mortgage lawyer . An experienced mortgage lawyer near you can assist you with preparing and recording the document.

Save Time and Money - Speak With a Lawyer Right Away

• Buy one 30-minute consultation call or subscribe for unlimited calls
• Subscription includes access to unlimited consultation calls at a reduced price
• Receive quick expert feedback or review your DIY legal documents
• Have peace of mind without a long wait or industry standard retainer
• Get the right guidance - Schedule a call with a lawyer today!

Need a Mortgage Lawyer in your Area?

• Connecticut
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• West Virginia

Daniel Lebovic

LegalMatch Legal Writer

Original Author

Prior to joining LegalMatch, Daniel worked as a legal editor for a large HR Compliance firm, focusing on employer compliance in numerous areas of the law including workplace safety law, health care law, wage and hour law, and cybersecurity. Prior to that, Daniel served as a litigator for several small law firms, handling a diverse caseload that included cases in Real Estate Law (property ownership rights, residential landlord/tenant disputes, foreclosures), Employment Law (minimum wage and overtime claims, discrimination, workers’ compensation, labor-management relations), Construction Law, and Commercial Law (consumer protection law and contracts). Daniel holds a J.D. from the Emory University School of Law and a B.S. in Biological Sciences from Cornell University. He is admitted to practice law in the State of New York and before the State Bar of Georgia. Daniel is also admitted to practice before the United States Courts of Appeals for both the 2nd and 11th Circuits. You can learn more about Daniel by checking out his Linkedin profile and his personal page. Read More

Jose Rivera

Managing Editor

Preparing for Your Case

• What to Do to Have a Strong Mortgage Law Case
• Top 5 Types of Documents/Evidence to Gather for Your Mortgages Case

Related Articles

• Assumable Mortgages
• Loan Modification Laws
• Behind on Mortgage Payments Lawyers
• Home Improvement Loan Disputes
• Reverse Mortgages for Senior Citizens
• Mortgage Settlement Scams
• Short Sale Fraud Schemes
• Deed of Trust or a Mortgage, What's the Difference?
• Owner Carryback Mortgages
• Contract for Deed Lawyers Near Me
• Mortgage Subrogation
• Property Lien Waivers and Releases
• Different Types of Promissory Notes
• Repayment Schedules for Promissory Notes
• Ft. Lauderdale Condos and Special Approval Loans
• Special Approval Loans for Miami Condos
• Removing a Lien on Property
• Mortgage Loan Fraud
• Subprime Mortgage Lawsuits
• Property Flipping and Mortgage Loan Fraud
• Avoid Being a Victim of Mortgage Fraud
• Second Mortgage Lawyers
• Settlement Statement Lawyers
• Loan Approval / Commitment Lawyers
• Broker Agreement Lawyers
• Truth in Lending Disclosure Statement (TILA)
• Housing and Urban Development (HUD) Info Lawyers
• Good Faith Estimate Lawyers
• Mortgage Loan Documents

Discover the Trustworthy LegalMatch Advantage

• No fee to present your case
• Choose from lawyers in your area
• A 100% confidential service

How does LegalMatch work?

Law Library Disclaimer

16 people have successfully posted their cases

• Assignment of Mortgage

Get free proposals from vetted lawyers in our marketplace.

Real Estate Terms Glossary

• Annual Percentage Rate
• Application Fee
• Appreciation
• Assessed Value
• Assumable Mortgage
• Assumption Fee
• Automated Underwriting
• Balance Sheet
• Balloon Mortgage
• Balloon Payment
• Before-tax Income
• Biweekly Payment Mortgage
• Bridge Loan
• Building Code

What is an Assignment of Mortgage?

In real estate, an assignment of mortgage is the transfer of a mortgage, or mortgage note , to another party which typically happens on the servicing side or lender side. This is commonly seen one when lender sells or transfers your mortgage to another lender. Lenders typically have the right to to sell mortgages and assign them to new parties, but don’t typically allow borrowers to do the same. When a borrower transfers their mortgage obligation to a new party, this is called an assumed mortgage.

Assignment of Mortgage Examples

Examples where you will find assignment of mortgages include:

• Example 1. A lender selling your mortgage to another lender for servicing.

Here’s Property Shark’s definition of assignment of mortgage .

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Meet some of our Real Estate Lawyers

I am a seasoned corporate transactional attorney with over 20 years of combined outside and inside General Counsel experience. My experience includes helping companies of all sizes, including start-ups with general corporate matters and commercial transactions.

Keidi S. Carrington brings a wealth of legal knowledge and business experience in the financial services area with a particular focus on investment management. She is a former securities examiner at the United States Securities & Exchange Commission (SEC) and Associate Counsel at State Street Bank & Trust and has consulted for various investment houses and private investment entities. Her work has included developing a mutual fund that invested in equity securities of listed real estate investment trusts (REITs) and other listed real estate companies; establishing private equity and hedge funds that help clients raise capital by preparing offering materials, negotiating with prospective investors, preparing partnership and LLC operating agreements and advising on and documenting management arrangements; advising on the establishment of Initial Coin Offerings (ICOs/Token Offerings) and counseling SEC registered and state investment advisers regarding organizational structure and compliance. Ms. Carrington is a graduate of Johns Hopkins University with a B.A. in International Relations. She earned her Juris Doctorate from New England Law | Boston and her LL.M. in Banking and Financial Law from Boston University School of Law. She is admitted to practice in Massachusetts and New York. Currently, her practice focuses on assisting investors, start-ups, small and mid-size businesses with their legal needs in the areas of corporate and securities law.

Retired Dentist transitioned to Law, with a special interest in Commercial Real Estate, Startup businesses, Asset Purchase Agreements, and Employment Contracts. I love to help dentists and physicians with legal issues pertaining to licensing, credentialing, employment, and general business-legal questions.

T. Phillip B.

Attorney creating plans and strategies to help individuals create, build, protect and pass on wealth.

Corporate counsel with years of in-house experience working with and reporting to board / executive-level and upper management, along with extensive regional / national law firm background in commercial transactions and contracts, complex commercial litigation, and employment matters. Skilled at executing corporate priorities, driving profitability by implementing goal-oriented processes to achieve revenue and productivity targets, and managing company litigation and outside counsel. Recognized for creating policies and practices to address ethical dilemmas and resolving misconduct.

Jim Slattery most recently served as General Counsel at Regional News Network, a large owner of broadcast television stations. Jim is an experienced attorney with broad-based expertise. He is a seasoned negotiator who has been involved in negotiations as complex as the Olympic Games. Jim spent 18 years as Vice President for Business and Legal Affairs at NBCUniversal. Previously, Jim worked in the media industry in various roles at All American Television. Jim’s success can be attributed to his ability to properly analyze data, manage projects, lead teams, develop creative solutions for complex problems, focus on strategically optimizing assets, manage/allocate risk and collaborate with divergent constituent groups to achieve objectives. Jim received a J.D. and a B.B.A. from the University of Notre Dame.

Find the best lawyer for your project

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

Real Estate lawyers by city

• Atlanta Real Estate Lawyers
• Austin Real Estate Lawyers
• Boston Real Estate Lawyers
• Chicago Real Estate Lawyers
• Dallas Real Estate Lawyers
• Denver Real Estate Lawyers
• Fort Lauderdale Real Estate Lawyers
• Houston Real Estate Lawyers
• Las Vegas Real Estate Lawyers
• Los Angeles Real Estate Lawyers
• Memphis Real Estate Lawyers
• Miami Real Estate Lawyers
• New York Real Estate Lawyers
• Oklahoma City Real Estate Lawyers
• Orlando Real Estate Lawyers
• Philadelphia Real Estate Lawyers
• Phoenix Real Estate Lawyers
• Richmond Real Estate Lawyers
• Salt Lake City Real Estate Lawyers
• San Antonio Real Estate Lawyers
• San Diego Real Estate Lawyers
• San Francisco Real Estate Lawyers
• Seattle Real Estate Lawyers
• Tampa Real Estate Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Find lawyers and attorneys by city

What Is Assignment of Mortgage: What You Need to Know

We will explore the idea of mortgage assignment in this thorough guide, going over its definition, steps involved, potential consequences, and more. So read on to learn more about this important facet of the real estate market, whether you’re a homeowner, a prospective buyer, or just inquisitive about mortgages.

What is Assignment of Mortgage?

The assignment of mortgage, often simply referred to as mortgage assignment , is a legal process that involves the transfer of a mortgage loan from one party to another. This transfer typically occurs between mortgage lenders or financial institutions and is a common practice within the mortgage industry.

The Key Parties Involved

• Assignor: The person transferring the mortgage is known as the assignor. The initial lender or financial organization that gave the borrower the mortgage loan is often the assignor.
• Assignee: The assignee is the party receiving the mortgage assignment. This could be another lender or financial institution that is buying the mortgage, often as part of a financial transaction.
• Borrower: The borrower is the individual or entity that initially took out the mortgage loan to finance the purchase of a property.

Why is Assignment of Mortgage Necessary?

Assignment of mortgage occurs for various reasons, and it serves specific purposes for all parties involved.

1. Loan Portfolio Management

Mortgage assignment is a common practice used by lenders to better manage their loan portfolios. Lenders might raise funds to offer more loans or issue new mortgages by selling or transferring mortgage loans to other financial organizations. This procedure aids in keeping their portfolios risk-balanced and liquid.

2. Risk Mitigation

Lenders may also assign mortgages to mitigate risk. When they transfer a mortgage to another entity, they are essentially transferring the associated risk as well. This can be a strategic move to reduce their exposure to potential defaults or financial instability.

3. Secondary Mortgage Market

The secondary mortgage market plays a significant role in the assignment of mortgages. Many mortgages are bundled together into mortgage-backed securities (MBS) and sold to investors. Assignment of mortgages allows lenders to participate in this market, which provides additional funding for new mortgage loans.

The Assignment of Mortgage Process

The process of assigning a mortgage, or deciding to sell your mortgage , involves several steps and legal requirements. Here’s a breakdown of the typical process:

1. Agreement between Parties

The assignor (original lender) and assignee (new lender or investor) must enter into a formal agreement outlining the terms and conditions of the new mortgage assignment. This agreement includes details such as the transfer price, terms of the loan, and any specific warranties or representations.

2. Notice to the Borrower

Once the agreement is in place, the borrower is typically notified of the assignment. This notice informs them that the servicing of their mortgage, including collecting monthly mortgage payments, will now be handled by the assignee. The borrower is advised to send future payments to the assignee.

3. Recordation

In many jurisdictions, mortgage assignments must be recorded with the appropriate government office, such as the county recorder’s office. This recordation provides public notice of the transfer and ensures that the assignee has a legal claim on the property.

4. Continuation of Monthly Mortgage Payments

For the borrower, the most noticeable change is the address where monthly payments are sent. Instead of sending payment to the original lender, the borrower will send them to the assignee. It is crucial for borrowers to keep records of these changes to avoid any confusion or missed payments.

Implications of Mortgage Assignment for Borrowers

While the assignment of mortgage primarily involves lenders and investors, it can have implications for borrowers as well. Here are some important considerations for borrowers:

1. No Change in Loan Terms

Borrowers should be aware that the assignment of mortgage does not change the terms of their loan. The interest rate, monthly payments, and other loan terms remain the same. The only change is the entity to which payments are made.

2. Proper Record-Keeping

Borrowers must maintain accurate records of their mortgage payments and correspondence related to the assignment. This helps ensure that payments are correctly credited and can be vital in case of any disputes or issues.

3. Communication with the New Lender

If borrowers have questions or concerns about their mortgage after the assignment, they should reach out to the new lender or servicer. Open and clear communication can help address any issues that may arise during the transition.

4. Property Taxes and Insurance

Borrowers are still responsible for property taxes and homeowner’s insurance, even after the assignment of mortgage. These payments are typically not affected by the transfer of the loan.

The Role of Mortgage Servicers

Mortgage servicers play a crucial role in the assignment of mortgage process. This section will explore the responsibilities of mortgage servicers, their relationship with borrowers, and how they manage mortgage loans on behalf of investors or lenders.

Legal Requirements and Regulations

Assignment is subject to various legal mortgage requirements and regulations that vary by jurisdiction. Discussing these legal aspects will help readers understand the legal framework governing the assignment of mortgages in their region and how it impacts the process.

Impact on Credit and Credit Reporting

The assignment of mortgage can have implications for borrowers’ credit reports and scores. Explore how mortgage assignment can affect credit histories, reporting by credit bureaus, and what borrowers can do to protect their credit during and after the assignment.

Assignment of Mortgage vs. Assumption of Mortgage

Differentiating between assignment of mortgage and assumption of mortgage is important. This section will explain the key differences, where one party takes over the mortgage and liability, while the other party merely transfers the loan to a new lender.

Impact on Property Taxes and Insurance

Taxes and insurance are essential components of homeownership. Explain how the assignment of mortgage may affect property tax payments and the homeowner’s insurance policy, as these are often escrowed into the monthly mortgage payment.

Potential Challenges and Disputes

Discuss common challenges or disputes that can arise during or after the assignment of mortgage, such as miscommunication, incorrect payment processing, or disputes over ownership rights. Offer advice on how to handle and resolve these issues.

Foreclosure and Default Scenarios

In the unfortunate event of mortgage default, understanding how the assignment of mortgage affects foreclosure proceedings is crucial. Explain how the assignee handles foreclosures and what options are available to borrowers facing financial difficulties.

Future Trends and Innovations

Explore emerging trends and innovations in the mortgage industry related to the assignment of mortgages. This could include the use of blockchain technology, digital mortgages, or other advancements that may impact the process.

In the complex world of real estate and mortgage financing , the assignment of mortgage plays a pivotal role in the movement of funds and management of risk. It allows lenders to efficiently manage their portfolios, mitigate risk, and participate in the secondary mortgage market. For borrowers, understanding the process and implications of mortgage assignment is essential to ensure the smooth continuation of their monthly mortgage payments.

As you navigate the world of homeownership or consider entering it, remember that the assignment of mortgage is a routine occurrence designed to benefit all parties involved. By staying informed and maintaining open communication with your lender or servicer, you can ensure that your mortgage loan remains a manageable and secure financial commitment.

In summary, purchase of mortgage is a vital mechanism within the mortgage industry that facilitates the transfer of mortgage loans from one party to another. This process helps lenders manage their portfolios, mitigate risk, and participate in the secondary mortgage market.

For borrowers, it means a change in the entity collecting their monthly mortgage payments but typically does not alter the terms of the original loan. Keeping accurate records and staying informed about the transition are crucial steps to ensure a smooth experience for homeowners. So, whether you’re a homeowner, lender, or investor, understanding assignment of mortgage is key to navigating the real estate landscape effectively.

This article is for informational purposes only and does not constitute legal, tax, or accounting advice.

Written by Alan Noblitt

Leave a comment.

Your email address will not be published. Required fields are marked *

Have a question?

Click the button below, and we will get back to you quickly

• Find a Lawyer
• Ask a Lawyer
• Research the Law
• Law Schools
• Laws & Regs
• Newsletters
• Justia Connect
• Pro Membership
• Basic Membership
• Justia Lawyer Directory
• Platinum Placements
• Gold Placements
• Justia Elevate
• Justia Amplify
• PPC Management
• Google Business Profile
• Social Media
• Justia Onward Blog

U.S. Bank NA v Cannella

The following papers numbered 1 to 6 were read on Plaintiff's motion for an order granting summary judgment against Defendant Rocco Cannella and striking his Answer, affirmative defenses and counterclaims; amending the caption; granting default judgment against the remaining defendants; appointing a referee and such other just and proper relief:

Upon reading the foregoing papers, it is ORDERED that Plaintiff's motion is disposed as follows:

On October 9, 2017, Plaintiff commenced this residential mortgage foreclosure action by filing a Summons and Complaint against Defendant borrower, Rocco Cannella ("Defendant"), Defendant lienholders, Citibank (South Dakota), N.A. ("Citibank") and HSBC Bank Nevada, N.A. ("HSBC"), and "John Doe".

On May 22, 2007, Defendant executed a note in the amount of $488,000 ("Note") payable to JPMorgan Chase Bank, N.A. ("Chase"). Defendant secured the Note by executing a mortgage against real property located at 15 Spruce Court, Nanuet, New York 10954 ("Mortgage").

On November 11, 2011, Defendant entered into a Loan Modification Agreement with Chase ("Agreement").[FN1] Affidavit of Patrick Riquelme, Document Control Officer of Select Portfolio Servicing, Inc. ("SPS"), at ¶ 7 (NYSCEF Doc. 36). The "Agreement created a single lien of $506,676.03." Id. The Agreement also "changed the interest rate to 3.125% per annum for the first five years and then increased to 4.000% in the sixth through the twenty-fifth year."Affirmation of Peter R. Bonchonsky, Esq. in Support of Motion at ¶ 6 (referencing Agreement at ¶ 7, attached to Riquelme Affidavit as Exhibit C). As Riquelme attests, "[t]he Note [dated May 22, 2007], Mortgage, and Modification Agreement are the 'Loan Documents' referenced herein that memorialize the 'Loan'."[FN2] Affidavit of Patrick Riquelme at ¶ 9.

Chase subsequently endorsed the Note in blank on an undated allonge, which is "titled in bold, capital letters 'ALLONGE TO MORTGAGE NOTE'". Reply Affirmation of Peter R. Bonchonsky, Esq. at ¶ 10 (NYSCEF Doc. 54). The allonge "contains very specific language stating that the Allonge pertains to the ROCCO CANNELLA $488,000 Note dated May 22, 2007, in favor of JPMorgan Chase Bank, N.A., with loan number 1139308359 and relating to the property address of 15 Spruce Court, Nanuet, New York 10954. It is endorsed in blank by an authorized officer (vice president) of JPMorgan Chase Bank, N.A." Id.

Defendant defaulted on the Loan by failing to make the payment that was due November 1, 2016.[FN3] Thereafter, the Note and Mortgage were transferred to Plaintiff.[FN4] "On August 3, 2017, the Mortgage together with 'all beneficial interest' under the Mortgage was assigned to Plaintiff. The assignment was recorded on August 4, 2017 in Instrument Number 2017-0024861." Riquelme Affidavit at ¶ 8 (Assignment is annexed as Exhibit D).

SPS, Plaintiff's loan servicer and attorney-in-fact, is in possession of the original Note, Mortgage and Agreement (the Loan Documents) on Plaintiff's behalf. SPS sent the default notices required by the Mortgage and RPAPL § 1304 to Defendant prior to commencement of the action.

On November 20, 2017, Defendant filed an Answer, asserting five combined affirmative defenses and counterclaims arising under the Truth in Lending Act and Regulation "Z" for allegedly failing to inform him of his right to rescind the loans (15 USC §§ 1601 et seq; 12 CFR § 226); deceptive business practices under General Business Law § 349 by extending credit based on collateral rather than capacity to repay; violations of Banking Law §§ 6-l and 6-m; and Banking Law § 598. Defendant also alleged six additional affirmative defenses raising plaintiff's lack of standing; failure to provide notice of default; violations of RPAPL §§ 1304 and 1306; statute of limitations bar; and improper transfer of the Note and Mortgage after the closing date set forth in the pooling and servicing agreement ("PSA") pursuant to which Plaintiff acquired the Note (NYSCEF Doc. 16).

On December 22, 2017, Plaintiff replied to defendant's counterclaims, asserting general denials and affirmative defenses (NYSCEF Doc. 23).

On September 28, 2018, Plaintiff filed the instant motion seeking summary judgment against Defendant and striking the Answer, affirmative defenses and counterclaims; amending the caption; granting default judgment against the remaining defendants; appointing a referee and other just and proper relief.

A plaintiff in an action to foreclose a mortgage "[g]enerally establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default". U.S. Bank Nat. Ass'n v Sabloff, 153 AD3d 879, 880 [2nd Dept 2017] (citing Plaza Equities, LLC v Lamberti, 118 AD3d 688, 689; see Deutsche Bank Natl. Trust Co. v Brewton, 142 AD3d 683, 684). However, where a defendant has affirmatively pleaded standing in the Answer,[FN6] the plaintiff must prove standing in order to prevail. Bank of New York Mellon v Gordon, 2019 NY Slip Op. 02306, 2019 WL 1372075, at *3 [2nd Dept March 27, 2019] (citing HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983, 983—984; HSBC Bank USA, N.A. v Calderon, 115 AD3d 708, 709; Bank of NY v Silverberg, 86 AD3d 274, 279).

A plaintiff establishes its standing in a mortgage foreclosure action by showing that it was the holder of the underlying note at the time the action was commenced. Sabloff, supra at 880 (citing Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361; U.S. Bank N.A. v Handler, 140 AD3d 948, 949). Where a plaintiff is not the original lender, it must show that the obligation was transferred to it either by a written assignment of the underlying note or the physical delivery of the note. Id. Because the mortgage automatically passes with the debt as an inseparable incident, a plaintiff must generally prove its standing to foreclose on the mortgage through either of these means, rather than by assignment of the mortgage. Id. (citing U.S. Bank, N.A. v Zwisler, 147 AD3d 804, 805; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754).

Here, Plaintiff demonstrated, prima facie, that it was the holder of the Note at issue when the action was commenced, by attaching the Note, endorsed in blank on an allonge, to the Summons and Complaint. Sabloff, supra at 880 (citing U.S. Bank N.A. v Saravanan, 146 AD3d 1010; Deutsche Bank Natl. Trust Co. v Logan, 146 AD3d 861; Nationstar Mtge., LLC v Weisblum, 143 AD3d 866).

Defendant contends that a material question of fact is raised as to whether the allonge was properly affixed to the Note, because the Note contains two (2) hole punches at the top of each of its three pages, while there are no hole punches on the allonge. This circumstance, Defendant argues, demonstrates that the allonge is not "permanently affixed" to the Note. Memorandum of Law in Opposition at 2. Defendant relies on HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983 [2nd Dept 2015], which held that an allonge attached to a note by a paperclip did not constitute a valid transfer of the note to the plaintiff, because the allonge was not so firmly affixed to the note as to become a part thereof. Id. at 985. Thus, the Second Department affirmed the Supreme Court's order dismissing the action for lack of plaintiff's standing.

Defendant asserts that the affidavit of Patrick Riquelme, SPS Document Control Officer, fails to establish that the allonge was permanently affixed to the Note. Defendant alleges that Riquelme's affidavit is deficient, because he "simply states that the Allonge is affixed but not that it is 'permanently affixed', which is the legal standard." Memorandum of Law in Opposition at 3 (citing Riquelme Affidavit at ¶ 5). Defendant states that Plaintiff's counsel, Peter R. Bonchonsky, Esq., also "does not state that the Allonge was permanently affixed, simply that it was affixed." Id. (citing Bonchonsky Affirmation at ¶ 4). Defendant continues, that "[t]here is no statement as to when the Allonge was attached and no statement that the Allonge was permanently affixed to the Note in accordance with UCC § 3-202 and caselaw. Furthermore, there is no payee/transferee/ assignee specified in the Note." Id. Defendant concludes that "Plaintiff has not satisfied its burden of establishing standing [thus,] there is an existence of material fact with respect to physical possession and Plaintiff's Motion for Summary Judgment must be denied." Id.

In reply, Plaintiff asserts, in the first instance, that Defendant has not raised a triable issue of fact, because he did not submit a party affidavit. Plaintiff advances the argument that Defendant's counsel's affirmation alone is not sufficient to raise a triable issue of fact. Reply Affirmation of Peter Bonchonsky, Esq. at ¶ 1-2 (NYSCEF Doc. 54).

Plaintiff further contends that Defendant has applied its own incorrect standard, which purportedly requires that the allonge must be "permanently" affixed to the note, when "neither the language of § UCC 3-202 nor any controlling decisional law require that an endorsement and/or allonge be dated nor that it be shown [to be] 'permanently' affixed to the note." Id. at ¶ 3 (emphasis in original). Plaintiff again refers to Riquelme's statement that "[t]he Note bears an endorsement and/or Allonge affixed to the Note " and to the copy of the Note attached to its Complaint to establish its standing. Affidavit of Patrick Riquelme at ¶ 5 (NYSCEF Doc. 36).

The Court will first address the issue whether Plaintiff's compliance with UCC § 3-202(2) can be presented by an attorney affirmation rather than a party affidavit.

Defense counsel attempts to raise the legal issue whether the Note complies with the UCC, based on her contention that the allonge does not appear to be "permanently" affixed to the Note. Defendant borrower has no personal knowledge of whether the allonge is affixed to the Note, as he certainly would not have seen the Note after it was transferred to Plaintiff. Defendant could only have acquired personal knowledge about the allonge if Plaintiff complied with Defendant's Demand for Discovery and Inspection, which requested Plaintiff's production of the original Note and any allonge or endorsement page for inspection. Demand for Discovery and Inspection at ¶ h (NYSCEF Doc. 28). Although defense counsel stated that the parties exchanged discovery, there is no evidence that Plaintiff complied with the Demand for production of the original Note and allonge.[FN8] Nevertheless, the legal issue defense counsel raises in her affirmation does not require testimony from Defendant. Defense counsel's assertion is based upon her personal observation of the copy of the Note which is attached to the Complaint and to the motion papers, which she claims shows that the allonge is not firmly affixed to the Note.

The issue is properly raised by an attorney affirmation. "The affidavit or affirmation of an attorney, even if he has no personal knowledge of the facts, may, of course, serve as the vehicle for the submission of acceptable attachments which do provide 'evidentiary proof in admissible form', e. g., documents, transcripts." Zuckerman v City of New York, 49 NY2d 557, 563 [1980]. Moreover, "an affidavit based on documentary evidence in an attorney's possession is probative and sufficient, notwithstanding his lack of personal knowledge." Id. at 564 (Meyer, J., concurring) (citing Getlan v Hofstra Univ., 41 AD2d 830, 831 [2nd Dept 1973], app dsmd 33 NY2d 646 [1973]). Such an "affidavit of an attorney on a motion for summary judgment based on documentary evidence in the attorney's possession may have probative value and should be evaluated by the court." Getlan, supra at 831 (citing Glynn v Glynn, 30 AD2d 697; Lindner v Eichel, 34 Misc 2d 840, 845). Defense counsel's affirmation properly raises a question as to whether the allonge is firmly affixed to the Note and, if so, by what means.

Turning to the substantive issue involving UCC § 3-202(2), Defendant contends that the provision requires that an allonge must be "permanently" affixed to the underlying note for the note to be negotiated by delivery. UCC § 3-202(1) states, in pertinent part, that if, as is the case here, "the instrument is payable to order it is negotiated by delivery with any necessary indorsement". UCC § 3-202(1) (emphasis added). The pertinent language of UCC § 3-202(2) provides that when an indorsement is written on a separate piece of paper from a note, the paper must be "so firmly affixed thereto as to become a part thereof." UCC § 3-202(2) (emphasis added); Bayview Loan Servicing, LLC v Kelly, 166 AD3d 843 [2nd Dept 2018]; HSBC Bank USA, N.A. v Roumiantseva, supra at 985; see also One Westbank FSB v Rodriguez, 161 AD3d 715, 716 [1st Dept 2018]; Slutsky v Blooming Grove Inn, 147 AD2d 208, 212 [2nd Dept 1989] ( "The note secured by the mortgage is a negotiable instrument (see, UCC 3-104) which requires indorsement on the instrument itself 'or on a paper so firmly affixed thereto as to become a part thereof ' (UCC 3-202[2]) in order to effectuate a valid 'assignment' of the entire instrument (cf., UCC 3-202 [3], [4])").

It is, of course, apparent that the statute does not contain the word "permanently". Therefore, the requirement that an allonge be "permanently affixed" would have to be read into the statute. Defendant cited no decision of any court which has done so. Nor has Defendant cited any decision that has adopted the language "permanently affixed" as being equivalent to the stated language: "so firmly affixed thereto as to become a part thereof." While substituting "permanently affixed" in place of "so firmly affixed thereto as to become a part thereof" may not be unreasonable,[FN9] this Court declines to impose that standard or to use the term as a shorthand for the statutory language, which is very clear. In this Court's view, permanence has the connotation that the two documents, note and allonge, which were created at separate times, must become one, never to be separated upon being affixed. Indeed, if the need arose to separate the documents, as frequently occurs when a note is transferred to a new holder, an affidavit from someone with personal knowledge would be required to attest that the documents were firmly affixed—enter the trusty staple—separated for photocopying and immediately reaffixed, perhaps even by ensuring that the staples, if used, enter the pages through the very same holes created from the prior stapling.[FN10] While that may work for a document that generally remains static after [*6]it is created, perhaps such as a last will and testament,[FN11] a negotiable instrument is not a document in repose. A negotiable instrument, by its very nature, is intended to be handled, inspected and transferred to different entities, perhaps multiple times. In fact, throughout the life of a note, as Plaintiff's counsel explains in his Reply Affirmation, "[l]enders/servicers may ordinarily inspect, move, store or transfer notes ...". Reply Affirmation of Peter R. Bonchonsky, Esq. at ¶ 15. While the lifestyle and purpose of a note certainly require some measure of fixity, since the holder's rights and obligations derive from its form, its nature requires a lesser standard than permanence.[FN12] Thus, to the extent that Defendant attempts, by use of the term "permanently affixed", to apply a higher standard than that expressed in the statute, Defendant's contention is rejected. The plain wording of the statute can be readily interpreted and applied without substituting different terminology and falling into the trap of applying a different standard.

In fact, both parties misstate the standard explicitly expressed in UCC § 3-202(2); Defendant does so by overstating the requirement and Plaintiff does so by understating it. Therefore, the Court rejects both purported standards advanced by the parties. In any event, questions remain as to what means of attaching an allonge to a note satisfies the statutory requirement that the allonge must be "firmly affixed" and, in effect, "become a part of" the note and whether the allonge in this case meets that requirement.

The Appellate Division Departments which have addressed the New York UCC § 3-202(2) standard, have adhered to the standard clearly laid out in the statute. Where the issue has been raised in the summary judgment context, the appellate courts have either found a triable question of fact as to the manner of affixation of the allonge to the note or that the method of [*7]affixation that was utilized was insufficient to satisfy the standard. For example, in Bayview Loan Servicing, LLC v Kelly, 166 AD3d 843, 846 [2nd Dept 2018], the Second Department found "a triable issue of fact as to whether the note was properly endorsed in blank by an allonge 'so firmly affixed thereto as to become a part thereof' when it came into the possession of Wells Fargo, which later endorsed the note to the plaintiff." (citations omitted). The factors in the case which raised a triable issue of fact were: (1) in a prior action on the same note, the copy of the note that was attached to the complaint did not contain any endorsements or allonges. In the case before it, by contrast, the note contained an allonge with a blank endorsement that was not produced in the earlier action, despite the defendant having raised the issue of an endorsement in the prior action; (2) the allonge had certain physical attributes, which are not described in the opinion, but the court stated that those attributes were not consistent with the copy of the note to which the allonge was purportedly firmly affixed; and (3) an affidavit from the plaintiff's vice president did not clarify the issue, because his statements related only to a later endorsement to the plaintiff which was directly on the note, and he did not say anything about the blank endorsement from the original lender contained on the allonge. Based upon these factors, the Appellate Division held that the Supreme Court's grant of summary judgment was improper.

In One Westbank FSB v Rodriguez, 161 AD3d 715, 716 [1st Dept 2018], the First Department similarly found "a triable issue as to whether the purported indorsement [in blank, which was contained on an allonge that did not reference the note,] constituted a valid transfer of the underlying note to plaintiff." The court affirmed the Supreme Court's denial of summary judgment, because "there [was] no indication in the record that the blank indorsement was ever attached to the note, much less 'so firmly affixed thereto as to become a part thereof,' as required under NY UCC § 3-202(2)." Id. (citation omitted)).

HSBC Bank USA, N.A. v Roumiantseva, supra, 130 AD3d 983, which is cited by nearly every court to address the issue since the case was decided in 2015, considered a particular method of attachment or affixation of an allonge to the note. On a motion to dismiss, the Supreme Court directed the plaintiff to produce the original note and allonge pursuant to CPLR §3212(c). Upon production of the note and allonge, the court found the allonge affixed to the note by a paperclip. Finding that this method of affixing the allonge to the note did not satisfy the standard under UCC § 3-202(2), the court granted defendants' motion to dismiss for lack of standing. On appeal, the Second Department affirmed the trial court, holding that "the purported endorsement, attached by a paperclip, was not so firmly affixed to the note as to become a part thereof', as required by UCC § 3-202(2)." Id. at 985 (citing UCC § 3-202[2], Comment 3; Slutsky v Blooming Grove Inn, supra at 212; cf. U.S. Bank N.A. v Guy, 125 AD3d 845, 847 [1st Dept 2013]; Deutsche Bank Trust Co. Ams. v Codio, 94 AD3d 1040, 1041 [2nd Dept 2012]).[FN13] The [*8]Second Department further held that "the purported endorsement did not constitute a valid transfer of the underlying note to the plaintiff." Id. Consequently, the plaintiff lacking standing to foreclose.

In Deutsche Bank Nat. Trust Co. v Barnett, 88 AD3d 636 [2nd Dept 2011], the Second Department held that the plaintiff's submission of "copies of two different versions of an undated allonge which was purportedly affixed to the original note pursuant to UCC 3—202(2)" raised a triable issue of fact. Id. at 638 (citing Slutsky, supra at 212). The endorsement on the allonge which purportedly assigned the note from First Franklin, a division of Franklin of Indiana, to the plaintiff conflicted with the copy of the note submitted by the plaintiff, "which contain[ed] undated endorsements from Franklin of Indiana to First Franklin Financial Corporation (hereinafter Franklin Financial), then from Franklin Financial in blank." Id. Thus, the court held that summary judgment should have been denied.

There are several unreported decisions from various Supreme Courts which address UCC § 3-202(2) in varying degrees of depth. Federal Natl. Mtge. Assn. v Ersoy, 61 Misc 3d 1208(A) [Sup Ct, Suffolk County 2018] (finding a failure of proof, such as an affidavit or affirmation of someone with personal knowledge, showing that the allonge was attached to the note); U.S. Bank Nat. Ass'n v Steinberg, 42 Misc 3d 1201(A), * 5 [Sup Ct, Kings County 2013] (merely cites UCC § 3-202(2) but focuses on whether there was physical delivery); CIT Group/Consumer Finance v Platt, 33 Misc 3d 1231(A), *4 [Sup Ct, Queens County 2011] (involved an allonge that principally had an issue with the signatory lacking authority to endorse the note, as well as noting that the allonge was not firmly affixed to the note); IndyMac Bank F.S.B. v Garcia, 28 Misc 3d 1202(A), *2 [Sup Ct, Suffolk County 2010] (parrots the standard and cites the UCC provision, but does not discuss whether the allonge is affixed); LaSalle Bank Natl. Assn. v Lamy, 12 Misc 3d 1191(A), *3 [Sup Ct, Suffolk County 2006] (held that the "undated [allonge] d[id] not appear to be part of the note itself nor d[id] it appear to be affixed thereto so firmly as to become a part thereof." (citation omitted)).

It is unmistakably clear from these appellate and trial court decisions that Plaintiff's position must be rejected. Simply "annexing" or "affixing" an allonge to a note or statements to [*9]that effect in an affidavit do not comport with the language of UCC § 3-202(2) or satisfy the standard of that provision. Indeed, the Official Comment to UCC § 3-202(2) explains that "[s]ubsection (2) follows decisions holding that a purported indorsement on a mortgage or other separate paper pinned or clipped to an instrument is not sufficient for negotiation. The indorsement must be on the instrument itself or on a paper intended for the purpose which is so firmly affixed to the instrument as to become an extension or part of it. Such a paper is called an allonge."

Two justifications for the requirement that an allonge must be firmly affixed to a note have been advanced by various courts throughout the United States, as all states have adopted the UCC. One justification that has been presented is that the requirement serves to prevent fraud, making it much less likely that "a signature innocently placed upon an innocuous sheet of paper could be fraudulently attached to a negotiable instrument in order to simulate an indorsement." Adams v Madison Realty & Development, Inc., 853 F2d 163, 167 [3rd Cir 1988] (citing Pribus v Bush, 173 Cal Rptr 747, 751 [1981]). The second rationale is the usefulness of a firmly affixed allonge in tracing the "chain of title, thus furthering the [UCC's] goal of free and unimpeded negotiability of instruments." Id. (citing Haug v Riley, 101 Ga 372 [1897]; see also Crosby v Roub, 16 Wis 616, 626—27 [1863]; 4 W. Hawkland & L. Lawrence, Uniform Commercial Code Series § 3—202:05 (1984)). "The prime characteristic of a negotiable instrument is that it can be negotiated based on physical delivery and endorsement, and a buyer of the note can rely on its enforcement without resort to additional documentation." HSBC Bank USA, N.A. v Thomas, 46 Misc 3d 429, 433 [Sup Ct, Kings County 2014]. "[T]he rights and obligations connected to a negotiable instrument derive from its form, and are inextricably dependent on it." Id.

Where an "allonge has certain physical attributes inconsistent with the copy of the note to which it was purportedly firmly affixed", a triable issue of fact may be raised which precludes granting summary judgment. Bayview Loan Servicing, LLC v Kelly, supra at 846; see also HSBC Bank USA, N.A. v Thomas, supra at 433 (A discrepancy between the loan number referenced on the allonge and the number of the note was "sufficient to raise a question of fact as to whether the purported allonge was firmly affixed to the 2006 note").

Here, Defendant has identified a discrepancy in the way in which the pages of the Note are attached to one another, as opposed to the indeterminate way that the allonge is affixed to the Note. Defendant's contention appears to be well-founded, based on the fact that the pages of the original Note have two round holes punched at the top of each page, indicating that the pages are likely affixed at the top of each page with an Acco binder or equivalent device and the absence of the same holes at the top of the allonge. The Note and the allonge both contain tiny black marks that appear in the same location in the upper left-hand corner of the photocopied pages which likely signify staple holes.

In a very recent unreported decision by the Supreme Court in Suffolk County, Nationstar Mortgage LLC v Corrao, 63 Misc 3d 1203(A) [Sup Ct, Suffolk County March 18, 2019], the court stated, without any fanfare, that an "allonge was firmly affixed to the note by a staple ". Id. at *2. The court's focus in Corrao was not on the allonge stapled to the note, which the plaintiff established through an affidavit of its employee. Instead, the issue for the court was whether a different "page" which was also submitted with the copy of the note was part of the original note or a second allonge. The employee did not establish that the "page", which bore "an [*10]undated indorsement from the original lender to Amalgamated Bank, [a subsequent assignee],[FN14] was a copy of the reverse side of the last page of the note or a separate document." Id. As the court stated, "[w]ithout such proof, the 'page' appear[ed] to be an allonge and with no proof that it was firmly attached to the note, it would be an invalid indorsement." Id. (citing UCC 3-202 [2]; see Slutsky v Blooming Grove Inn, supra; HSBC Bank USA, N.A. v Roumiantseva, supra). The required proof was proffered by plaintiff's counsel, who had personally reviewed the original note and allonge while the firm had them in their possession at commencement of the action. Plaintiff's counsel attested "that the 'page' was actually the reverse side of the signatory page of the note, not a separate document, and [also] that the undated allonge in blank from Amalgamated Bank was firmly attached to the note by a staple", thereby establishing the plaintiff's standing.[FN15] Id.

There is no appellate decisional law in New York which finds staples to be a proper method of firmly affixing an allonge to a note. Other jurisdictions have found stapling an allonge to the note to be a sufficient means of firmly affixing the two documents. See, e.g., Southwestern Resolution Corp. v Watson, 964 SW2d 262 [Texas 1997], rehearing overruled [1998]; Lamson v Commercial Credit Corp., 531 P2d 966 [Colo 1975] ("the Bank executed a special two-page indorsement of the two checks to the plaintiff Lamson").[FN16] In Watson, the Texas Supreme Court reviewed the history of allonges under various revisions of the UCC, including the change from the requirement that it be 'attached thereto' to 'so firmly affixed thereto as to become a part thereof', noting that "the drafters of the new provision specifically contemplated that an allonge could be attached to a note by staples." Watson, supra at 263-264 (citing American Law Institute, Comments & Notes to Tentative Draft No. 1—Article III 114 (1946), reprinted in 2 Elizabeth Slusser Kelly, Uniform Commercial Code Drafts 311, 424 (1984) ("The indorsement must be written on the instrument itself or on an allonge, which, as defined in Section __, is a strip of paper so firmly pasted, stapled or otherwise affixed to the instrument as to become part of it.")). In Lamson, supra, the Supreme Court of Colorado determined that the equivalent Colorado UCC [*11]provision, Section 4-3-202(2), "does permit stapling as an adequate method of firmly affixing the indorsement [as] [s]tapling is the modern equivalent of gluing or pasting." 531 P2d at 968. That court held "that under the circumstances described, stapling an indorsement to a negotiable instrument is a permanent attachment so that it becomes 'a part thereof.' " Id.[FN17]

Much closer to home than Texas and Colorado, in Adams v Madison Realty & Development, Inc., supra, 853 F2d 163, a federal appellate court from the Third Circuit "assume[d], without actually deciding, that the loose indorsement sheets accompanying [the] notes would have been valid allonges had they been stapled or glued to the notes themselves." Id. at 165 (Cf. All American Finance Co. v Pugh Shows, Inc., 30 Ohio St.3d 130, 132-133 n. 3 [1987] (collecting cases showing disagreement among courts on how firmly indorsements must be affixed)). The court nonetheless undertook a lengthy analysis because the district court had determined that the "[f]ailure to properly attach the indorsements was 'hypertechnical'." The court held "the indorsement sheets were not physically attached to the instruments in any way, and thus patently fail[ed] to comply with the explicit Code prerequisite." Id. The court therefore vacated and remanded to the district court.

At this juncture, where it is unclear how the allonge is affixed to the Note, it would be speculative to conclude that the marks on the Note and allonge are staple holes. Riquelme has stated only that the allonge is "affixed to the Note"; he did not state how. Indeed, without any proof as to how the allonge is affixed, Riquelme's tepid statement falls far short of proof that the allonge is "firmly affixed". It is possible that the allonge is pinned to the Note or affixed with a paper clip, both methods which have been rejected. While it is more plausible that the allonge and Note are affixed by staples, the Court cannot make such a conclusion, which would be only a guess. What is evident from simple observation, however, and thus is not "speculation and guesswork" as Plaintiff contends,[FN18] is that the allonge plainly is not affixed in the same manner that the pages of the Note are themselves affixed to each other. Thus, it is unclear whether the affixing is firm enough to satisfy UCC § 3-202(2). The manner of affixing the allonge to the Note determines whether the Note itself was negotiable and thereby capable of being transferred to Plaintiff. See Roumiantseva, supra at 985; Adams, supra at 166 ("The instrument must be obtained through a process the Code terms 'negotiation,' defined as 'the transfer of an instrument in such form that the transferee becomes a holder.' U.C.C. § 3—202(1). If the instrument is payable to order negotiation is accomplished 'by delivery with any necessary indorsement'.").

Attempting to maneuver around the strictures of UCC § 3-202(2), Plaintiff argues that the specificity of the allonge was sufficient to effectuate the transfer of the Note, because it is particular to the subject Note. Plaintiff asserts that the allonge "contains very specific language [*12]stating that the Allonge pertains to the ROCCO CANNELLA $488,000 Note dated May 22, 2007, in favor of JPMorgan Chase Bank, N.A., with loan number 1139308359 and relating to the property address of 15 Spruce Court, Nanuet, New York 10954. It is endorsed in blank by an authorized officer (vice president) of JPMorgan Chase Bank, N.A." Reply Affirmation of Peter R. Bonchonsky at ¶ 10. Plaintiff contrasts the subject allonge with an allonge that does not contain specific references to a particular note, asserting that "there is no question that this Allonge directly pertains to the subject Note." Id.

Plaintiff cites no authority which states that a specifically worded allonge can substitute for UCC § 3-202(2)'s explicit requirement that an allonge must be firmly affixed to the note, and indeed, so firmly affixed as to become a part of the note. While, admittedly, the allonge contains clear evidence that it pertains to the subject Note,[FN19] UCC § 3-202(2) must still be met, as that determines whether the Note is negotiable and may be transferred by physical delivery. Moreover, the mere fact that the allonge is specific to the Note says nothing about whether the allonge is affixed to the Note, let alone, whether it is "firmly affixed" to the Note.

Plaintiff further attempts to sidestep the issue of UCC § 3-202 by arguing that the New York Assignment of Mortgage ("Assignment"), which assigned the subject Mortgage, also assigned the Note to Plaintiff. Plaintiff relies on the language in the Assignment which stated that Chase "does hereby grant, sell, assign, transfer and convey" to Plaintiff "all beneficial interest under a certain Mortgage dated May 22, 2007 made and executed by [Defendant] to and in favor of [Chase] upon property situated [at] 15 SPRUCE CT, NANUET, NY 10954 ". Riquelme Affidavit, Exhibit E, New York Assignment of Mortgage at 1 of 2. While Plaintiff contends that this language also assigned the Note, Plaintiff also cites NY Jur 2d Mortgages § 283 and Chase Home Finance, LLC v Micotta, 101 AD3d 1307 [3rd Dept 2012] (citing Bank of NY v Silverberg, 86 AD3d 274 [2nd Dept 2011]) in support of its further contention that no special language is needed to effectuate assignment of a note and mortgage.

A plaintiff can establish its standing through an assignment of a mortgage which includes language also assigning the note. See Emigrant Bank v Larizza, 129 AD3d 904 [2nd Dept 2015]; U.S. Bank N.A. v Akande, 136 AD3d 887 [2nd Dept 2016]; Wells Fargo Bank. N.A. v Archibald, 150 AD3d 937 [2nd Dept 2017]. As the Second Department stated in Silverberg, " '[n]o special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it'". Silverberg, supra, 86 AD3d at 280-281 (emphasis added) (citing Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612, 612 [2004], quoting Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55 [*13][1996]).[FN20] In addition, "[a]n assignor's failure to indorse the note will not render an assignment of mortgage invalid where said assignment was made in a writing and therein transferred the assignor's interests in both the note and the mortgage to the assignee." LaSalle Bank Nat. Ass'n v Lamy, 12 Misc 3d 1191(A) at *2 [Sup Ct, Suffolk County 2006] (citing Matter of Stralem, supra, 303 AD2d 120).

Plaintiff relies on three decisions of the Supreme Court, Suffolk County, which held the same language used in the Assignment—"all beneficial interest under a certain Mortgage"— sufficient to also transfer the subject note. Reply Affirmation at 8 (citing Deutsche Bank National Trust Co. v Francis, (2017 WL 2304042, Supreme Ct, Suffolk County); HSBC Bank v. Serafin, (2017 WL 1401364 Supreme Ct, Suffolk County); and Deutsche Bank National Trust Co. v Williams (2015 WL 7008076 Supreme Ct, Suffolk County)).

This Court declines to follow its sister courts in Suffolk County on this point. The Assignment in this case, while using the same language as the assignments in those cases, specifically referred to the Note elsewhere in the Assignment without using any language which can be construed as assigning the Note. Riquelme Affidavit, Exhibit D at 1 of 2. Immediately following the Section, Block and Lot numbers of the subject property, the Assignment states that "such Mortgage having been given to secure payment of Four Hundred Eighty Eight Thousand and 00/100ths ($488,000.00), which Mortgage is of record in the Office of the County Clerk or Register of ROCKLAND County, State of New York." Id. The Assignment did not go on to state that the referenced debt was simultaneously being assigned to Plaintiff. Assignment of the Note should have clearly followed the reference to the Note. It did not. Finally, the Assignment provides: "TO HAVE AND TO HOLD, the same unto Assignee, its successors and assigns forever, subject only to the terms and conditions of the above-described Mortgage." Id. Again, there is no mention of the Note.

Plaintiff's entire argument rests on the words "all beneficial interest under a certain Mortgage", without any specific reference to the Note or any language that can reasonably be construed as including the Note in the assignment. The drafter should have added the words "together with the note described in the Mortgage", or comparable language. See Matter of Stralem, 303 AD2d 120, 123 [2nd Dept 2003] ("The language of the assignment executed by the decedent could not have been more clear. [T]he decedent assigned the mortgage on the property, 'together with the note or obligation described in or secured by said mortgage' "); HSBC Bank USA, Nat. Ass'n v Miller, 26 Misc 3d 407, 412 [Sup Ct, Sullivan County 2009] ("nor did the language of the assignment explicitly assign 'the note or obligation described and secured by said mortgage'.") (citing Stralem, supra). In this Court's view, a written assignment of a note must be clear and unequivocal, or, at any rate, clearer than the language used in the Assignment.

Assignment of Mortgage.

The language in RPAPL § 258, which this Court emphasized—"together with the bond or obligation described in said mortgage"—stands in sharp contrast to the language used here in the Assignment—"all beneficial interest under a certain Mortgage". If such language is mere surplusage, as Plaintiff seems to believe, the drafters of RPAPL § 258 would not have included it in a statutory form promulgated for general use as best practice.

Indeed, the principle is so well established in New York that it cannot "be questioned that a mortgage given to secure [a] note[] is an incident to the latter and stands or falls with [the note]." Weaver Hardware Co. v Solomovitz, 235 NY 321, 331-332 [1923]. The Second Department has repeatedly and consistently held that "[a]n assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it." Deutsche Bank Nat. Trust Co. v Spanos, 102 AD3d 909, 911-912 [2nd Dept 2013]; HSBC Bank USA v Hernandez, 92 AD3d 843, 843 [2nd Dept 2012]; Bank of NY v Silverberg, supra at 280; U.S. Bank, NA v Collymore, 68 AD3d 752, 754 [2nd Dept 2009]; see also Merritt v Bartholick, 36 NY 44 [1867]. Because the Assignment here did not assign the Note, it does not constitute evidence of Plaintiff's prima facie standing to foreclose, as a matter of law.

The Court rejects Plaintiff's argument that the Assignment effectuated a transfer of the Note, by which Plaintiff need not satisfy UCC § 3-202(2)'s explicit requirement for the allonge to be firmly affixed to the Note. Plaintiff having failed to successfully circumvent UCC § 3-202(2), a triable issue of fact remains as to whether the purported endorsement on the allonge was firmly [*15]affixed to the Note as to constitute a valid transfer of the Note to Plaintiff, thereby conferring standing to foreclose.

Plaintiff has not established its prima face entitlement to judgment as a matter of law on the issue of standing. As a result, the Court need not consider any of the other requests for relief contained in Plaintiff's motion. See, e.g., Bank of New York v Willis, 150 AD3d 652, 654 [2nd Dept 2017]; New York Comm'l Bank v J Realty F. Rockaway Ltd., 108 AD3d 756, 757 [2nd Dept 2013]; Starkman v City of Long Beach, 106 AD3d 1076, 1078 [2nd Dept 2013]. Accordingly,Plaintiff's motion for summary judgment is denied in its entirety.

This action has been transferred to the Court's newly formed Mandatory Appearance Part for all further proceedings. The parties will receive notice from that Part of the next scheduled appearance.

The foregoing constitutes the Decision and Order of this Court.

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

Get free summaries of new New York Other Courts opinions delivered to your inbox!

• Bankruptcy Lawyers
• Business Lawyers
• Criminal Lawyers
• Employment Lawyers
• Estate Planning Lawyers
• Family Lawyers
• Personal Injury Lawyers
• Estate Planning
• Personal Injury
• Business Formation
• Business Operations
• Intellectual Property
• International Trade
• Real Estate
• Financial Aid
• Course Outlines
• Law Journals
• US Constitution
• Regulations
• Supreme Court
• Circuit Courts
• District Courts
• Dockets & Filings
• State Constitutions
• State Codes
• State Case Law
• Legal Blogs
• Business Forms
• Product Recalls
• Justia Connect Membership
• Justia Premium Placements
• Justia Elevate (SEO, Websites)
• Justia Amplify (PPC, GBP)
• Testimonials

12 U.S. Code § 2605 - Servicing of mortgage loans and administration of escrow accounts

Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding.

Each servicer of any federally related mortgage loan shall notify the borrower in writing of any assignment, sale, or transfer of the servicing of the loan to any other person.

Except as provided under subparagraphs (B) and (C), the notice required under paragraph (1) shall be made to the borrower not less than 15 days before the effective date of transfer of the servicing of the mortgage loan (with respect to which such notice is made).

The provisions of subparagraphs (A) and (B) shall not apply to any assignment, sale, or transfer of the servicing of any mortgage loan if the person who makes the loan provides to the borrower, at settlement (with respect to the property for which the mortgage loan is made), written notice under paragraph (3) of such transfer.

Each transferee servicer to whom the servicing of any federally related mortgage loan is assigned, sold, or transferred shall notify the borrower of any such assignment, sale, or transfer.

Except as provided in subparagraphs (B) and (C), the notice required under paragraph (1) shall be made to the borrower not more than 15 days after the effective date of transfer of the servicing of the mortgage loan (with respect to which such notice is made).

Any notice required under paragraph (1) shall include the information described in subsection (b)(3).

During the 60-day period beginning on the effective date of transfer of the servicing of any federally related mortgage loan, a late fee may not be imposed on the borrower with respect to any payment on such loan and no such payment may be treated as late for any other purposes, if the payment is received by the transferor servicer (rather than the transferee servicer who should properly receive payment) before the due date applicable to such payment.

If any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 5 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested is taken within such period.

During the 60-day period beginning on the date of the servicer ’s receipt from any borrower of a qualified written request relating to a dispute regarding the borrower’s payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 1681a of title 15 ).

The 30-day period described in paragraph (2) may be extended for not more than 15 days if, before the end of such 30-day period, the servicer notifies the borrower of the extension and the reasons for the delay in responding.

In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.

A transferor or transferee servicer shall not be liable under this subsection for any failure to comply with any requirement under this section if, within 60 days after discovering an error (whether pursuant to a final written examination report or the servicer ’s own procedures) and before the commencement of an action under this subsection and the receipt of written notice of the error from the borrower, the servicer notifies the person concerned of the error and makes whatever adjustments are necessary in the appropriate account to ensure that the person will not be required to pay an amount in excess of any amount that the person otherwise would have paid.

If the terms of any federally related mortgage loan require the borrower to make payments to the servicer of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall make payments from the escrow account for such taxes, insurance premiums, and other charges in a timely manner as such payments become due. Any balance in any such account that is within the servicer ’s control at the time the loan is paid off shall be promptly returned to the borrower within 20 business days or credited to a similar account for a new mortgage loan to the borrower with the same lender.

Notwithstanding any provision of any law or regulation of any State, a person who makes a federally related mortgage loan or a servicer shall be considered to have complied with the provisions of any such State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of the servicing of a loan if such person or servicer complies with the requirements under this section regarding timing, content, and procedures for notification of the borrower.

The term “ effective date of transfer ” means the date on which the mortgage payment of a borrower is first due to the transferee servicer of a mortgage loan pursuant to the assignment, sale, or transfer of the servicing of the mortgage loan.

The term “ servicing ” means receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts described in section 2609 of this title , and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.

A person who makes a federally related mortgage loan shall not be liable to a borrower because of a failure of such person to comply with subsection (a) with respect to an application for a loan made by the borrower before the regulations referred to in paragraph (3) take effect.

A servicer of a federally related mortgage loan shall not be liable to a borrower because of a failure of the servicer to perform any duty under subsection (b), (c), (d), or (e) that arises before the regulations referred to in paragraph (3) take effect.

The Bureau shall establish any requirements necessary to carry out this section. Such regulations shall include the model disclosure statement required under subsection (a)(2).

For purposes of this subsection and subsections (l) and (m), the term “ force-placed insurance ” means hazard insurance coverage obtained by a servicer of a federally related mortgage when the borrower has failed to maintain or renew hazard insurance on such property as required of the borrower under the terms of the mortgage.

A servicer of a federally related mortgage shall accept any reasonable form of written confirmation from a borrower of existing insurance coverage, which shall include the existing insurance policy number along with the identity of, and contact information for, the insurance company or agent, or as otherwise required by the Bureau of Consumer Financial Protection.

No provision of this section shall be construed as prohibiting a servicer from providing simultaneous or concurrent notice of a lack of flood insurance pursuant to section 4012a(e) of title 42 .

All charges, apart from charges subject to State regulation as the business of insurance, related to force-placed insurance imposed on the borrower by or through the servicer shall be bona fide and reasonable.

A prior section 2605, Pub. L. 93–533, § 6 , Dec. 22, 1974 , 88 Stat. 1726 , related to advanced itemized disclosure of settlement costs by the lender and liability of the lender for failure to comply, prior to repeal by Pub. L. 94–205, § 5 , Jan. 2, 1976 , 89 Stat. 1158 .

2010—Subsec. (e)(1)(A). Pub. L. 111–203, § 1463(c)(1) , substituted “5 days” for “20 days”.

Subsec. (e)(2). Pub. L. 111–203, § 1463(c)(2) , substituted “30 days” for “60 days” in introductory provisions.

Subsec. (e)(4). Pub. L. 111–203, § 1463(c)(3) , added par. (4).

Subsec. (f)(1)(B), (2)(B). Pub. L. 111–203, § 1463(b)(1) , substituted “$2,000” for “$1,000”.

Subsec. (f)(2)(B)(i). Pub. L. 111–203, § 1463(b)(2) , substituted “$1,000,000” for “$500,000”.

Subsec. (g). Pub. L. 111–203, § 1463(d) , inserted at end “Any balance in any such account that is within the servicer’ s control at the time the loan is paid off shall be promptly returned to the borrower within 20 business days or credited to a similar account for a new mortgage loan to the borrower with the same lender.”

Subsec. (j)(3). Pub. L. 111–203, § 1098(4) , substituted “Bureau” for “Secretary” and struck out “, by regulations that shall take effect not later than April 20, 1991 ,” before “establish”.

Subsecs. (k) to (m). Pub. L. 111–203, § 1463(a) , added subsecs. (k) to (m).

1996—Subsec. (a). Pub. L. 104–208 amended heading and text of subsec. (a) generally. Prior to amendment, text consisted of pars. (1) to (3) relating to requirements for lenders of federally related mortgage loans to disclose to applicants whether servicing of such loan may be assigned, sold, or transferred, directed Secretary to develop model disclosure statement, and required signature of applicant on all such disclosure statements.

1994—Subsec. (a)(1)(B). Pub. L. 103–325 substituted “(B) at the choice of the person making a federally related mortgage loan—

“(i) for each of the most recent”

for “(B) for each of the most recent”, redesignated cls. (i) and (ii) as subcls. (I) and (II), respectively, and realigned margins, substituted “or” for “and” at end of subcl. (II), and added cl. (ii).

1991—Subsec. (j). Pub. L. 102–27 added subsec. (j).

Amendment by section 1098(4) of Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203 , set out as a note under section 552a of Title 5 , Government Organization and Employees.

Amendment by section 1463 of Pub. L. 111–203 effective on the date on which final regulations implementing that amendment take effect, or on the date that is 18 months after the designated transfer date if such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111–203 , set out as a note under section 1601 of Title 15 , Commerce and Trade.

• About the Editor

Mortgage Assignments: Assignment of a Mortgage Without the Underlying Note is A Nullity

In re Cornerstone Homes, Inc ., 544 B.R. 492 (Bankr. W.D. N.Y. 2015) –

A chapter 11 trustee sought a judgment that a series of mortgages were unenforceable as a matter of law because the written assignments transferring them to the current mortgagees were insufficient. If the trustee prevailed, the mortgage loans would be transformed from secured to unsecured claims.

The debtor bought, renovated and then sold or rented single-family homes. At the time of its bankruptcy filing it owned over 700 properties valued at more than $18 million. Originally the debtor financed its operations by soliciting money from hundreds of individual investors. Later it obtained financing through commercial lenders that involved consolidating individual investor notes in combination with new advances.

Each individual investor held a note that was secured by a mortgage. In connection with consolidation of some of these notes, the individual investor executed a written assignment of its mortgage to a commercial lender that included the following language: “[T]he assignor … hereby assigns unto [the assignee] … a certain mortgage made by [debtor] … together with the bond or obligation described in said mortgage ….” The commercial lender both acquired the existing notes and mortgages and advanced new money, as evidenced by a consolidated note secured by a consolidated mortgage. The individual investors did not indorse or physically deliver the underlying notes.

The court viewed the question as whether a lender would have standing to enforce the mortgage based on the assignment without endorsement or delivery of the related note.

The trustee’s argument was “based on the fundamental tenet of real estate law: ‘a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it.'” Thus he argued that the mortgagees must show that they were entitled to enforce both the mortgages and the underlying notes. Since the notes were negotiable instruments under Article 3 of the UCC, he argued that they could only be negotiated by endorsement and physical delivery, and thus the written assignments were insufficient.

There were no allegations that the assignments were forgeries, the investors did not have the legal right to transfer their notes and mortgages, or that “any shenanigans were afoot.” The argument was simply that the written assignment without endorsement and delivery of the note failed as a matter of law.

The trustee’s position required the court to disagree with a long line of cases holding that either a written assignment or physical delivery would be valid to transfer a note. The trustee contended that these cases conflicted with the UCC requirements for negotiation and could be traced back to a single “infirm” case.

On the other hand, the lenders contended that a written assignment was sufficient – pointing to sections of the state real property law statute which provided that a note and mortgage could be transferred by an assignment, as well as the long line of cases that the trustee was asking the court to ignore. One of the lenders made the further point that the court was dealing with the consolidated notes, as opposed to the original investor notes, and the lenders were clearly holders of the consolidated notes.

Further two of the lenders argued that the trustee was relying on a body of law applicable to the consumer residential mortgage lending context that was designed to deal with problems arising from MERS (Mortgage Electronic Recording System). Finally some of the lenders argued that at a minimum the new advances made by the lenders should be treated as secured claims. (The trustee asked the court to wait to rule on this final point.)

The court noted that cases discussing enforceability of a mortgage typically occur in the context of a foreclosure. To establish standing to foreclose, a mortgagee must be able to enforce both the mortgage and the note, and it was well-established that a mortgage cannot exist independent of the debt so that “a transfer or assignment of only the mortgage without the debt is a nullity and no interest is acquired by it.”

However, the court rejected the next step in the trustee’s argument, finding that the “formulaic application” of the UCC was not supported by a substantial majority of the federal and state court decisions, citing a dozen cases to illustrate the point that and assignee has standing to foreclose and either a written assignment or physical delivery of the note is sufficient.

The court went out of its way to emphasize that (1) the individual investors actually signed mortgage assignments that (2) specifically referenced the bond or obligation described in the mortgages, and (3) there was no dispute about the fact that the individual investors could legally assign their notes and mortgages. It went on to distinguish the MERS line of cases by noting that MERS held only the mortgage and had no legal rights to the underlying note. The court also distinguished cases where there was an assignment of a mortgage without reference to the underlying debt.

Consequently, the court found that the commercial lenders had standing to enforce their consolidated notes and mortgages based on valid assignments and denied the trustee’s motion.

Any transfer of mortgage loans needs to be handled with care and attention to detail, and the intersection between the UCC and real estate law can be tricky. As indicated by this case, doing things the right way (whatever that is) can mean the difference between holding a secured claim and an unsecured claim.

Vicki R Harding, Esq.

Share this:

About bankruptcyrealestateinsights, leave a comment cancel reply.

• Search for:

About Bankruptcy-RealEstate-Insights

Subscribe via rss.

Subscribe by E-Mail

• April 2020  (2)
• March 2020  (4)
• February 2020  (4)
• January 2020  (4)
• December 2019  (4)
• November 2019  (4)
• October 2019  (5)
• September 2019  (4)
• August 2019  (4)
• July 2019  (5)
• June 2019  (4)
• May 2019  (5)
• April 2019  (4)
• March 2019  (4)
• February 2019  (4)
• January 2019  (5)
• December 2018  (4)
• November 2018  (4)
• October 2018  (5)
• September 2018  (4)
• August 2018  (5)
• July 2018  (4)
• June 2018  (4)
• May 2018  (5)
• April 2018  (4)
• March 2018  (4)
• February 2018  (4)
• January 2018  (5)
• December 2017  (4)
• November 2017  (5)
• October 2017  (4)
• September 2017  (4)
• August 2017  (5)
• July 2017  (4)
• June 2017  (4)
• May 2017  (5)
• April 2017  (4)
• March 2017  (5)
• February 2017  (4)
• January 2017  (4)
• December 2016  (4)
• November 2016  (5)
• October 2016  (4)
• September 2016  (4)
• August 2016  (5)
• July 2016  (4)
• June 2016  (5)
• May 2016  (4)
• April 2016  (4)
• March 2016  (5)
• February 2016  (4)
• January 2016  (4)
• December 2015  (5)
• November 2015  (4)
• October 2015  (3)
• September 2015  (5)
• August 2015  (4)
• July 2015  (5)
• June 2015  (4)
• May 2015  (4)
• April 2015  (5)
• March 2015  (5)
• February 2015  (7)
• January 2015  (8)
• December 2014  (8)
• November 2014  (7)
• October 2014  (9)
• September 2014  (9)
• August 2014  (9)
• July 2014  (7)
• June 2014  (8)
• May 2014  (9)
• April 2014  (9)
• March 2014  (8)
• February 2014  (8)
• January 2014  (9)
• December 2013  (9)
• November 2013  (8)
• October 2013  (9)
• September 2013  (8)
• August 2013  (9)
• July 2013  (8)
• June 2013  (8)
• May 2013  (9)
• April 2013  (9)
• March 2013  (9)
• February 2013  (7)
• January 2013  (9)
• December 2012  (7)
• November 2012  (7)
• October 2012  (9)
• September 2012  (8)
• August 2012  (10)

____________________

• Terms of Use

• Already have a WordPress.com account? Log in now.
• Subscribe Subscribed
• Copy shortlink
• Report this content
• View post in Reader
• Manage subscriptions
• Collapse this bar

• Banking & Financial Services
• Corporate & Small Businesses
• Foreclosure & Distressed Real Estate
• Municipal & Governmental Affairs
• Real Estate
• Trust and Estates
• Attorney Profiles

Standing: No Need To Endorse Note

DATE PUBLISHED

PRACTICE AREA

Not so many years ago, foreclosure defendants and their counsel came to the realization that arguing lack of standing on the part of the foreclosing party was an effective way to delay or even defeat a foreclosure action.  After all, the plaintiff had to be the holder of the note and the mortgage at the inception of the action.  Too many lenders and servicers abetted such a defense through careless or sloppy procedures – or lack of awareness of applicable law or just the inability to demonstrate ownership of the documents.

Among the problems (obviously to be avoided) were these:

• The assignment into plaintiff was properly done, but it came after the action was initiated, a fatal defect because the plaintiff must be the holder when the action is begun.
• The assignment into the plaintiff is fine, but there is a break in the earlier chain of assignments calling into question the validity of plaintiff’s ownership of the documents.
• The assignment to plaintiff recited the mortgage but omitted mentioning the note. (The mortgage is deemed transferred with the note, but not vice versa.)
• There is no written assignment at all to plaintiff – not an issue because a note and mortgage can be assigned by delivery alone, but plaintiff has no testimony or evidence to prove delivery.

Unfortunately, this “standing” morass reached the point where courts seemed to treat the slightest miscue as a basis to declare a lack of standing.  At every turn it seemed, the ruling against lenders and servicers was the proverbial “gotcha”.

A not uncommon roadblock was the too often encountered situation of the note not being endorsed by the assigning party.  When the endorsement is accomplished by an allonge, what frequently happened was that the allonge became separated from the note, hardly so surprising when papers go through many hands.  The problem was that more than a few courts ruled that the no longer affixed allonge raised an issue of whether the note was actually assigned.  Lenders’ and servicers’ counsel generally had compelling responsive arguments but these were rejected with some regularity.

But now a new case (from Kings County) correctly recites applicable law.  [ Stabilis Fund II, LLC v. Nostrand Plaza, Inc. , 2014 Slip Op 50674(U).]

There, the usual standing defense was raised, upon the claim that the allonge was no longer affixed to the note.  But there was an assignment agreement confirming the event of assignment.  That allowed the court to adopt the argument plaintiff counsel always makes – “[w]hen a valid assignment is made, the assignee succeeds to the assignor’s position and acquires the rights the latter had.  [Citing Matter of Stralem , 303 A.D.2d 120, 123 (2d Dept. 2003).]

It then added in context the related recognized concept that either a written assignment of a note, or its physical delivery, is sufficient to transfer the obligation and the mortgage passes with the debt as an inseparable incident.

Here, then, the note was validly assigned pursuant to the assignment agreement.  Accordingly the assignment agreement established the plaintiff’s standing.

The court boldly characterized the borrower’s argument about the separated allonge as a red herring because – and this is the critical part – even were that separation a fact (apparently it was unclear) assignment of a note by a written assignment is valid even without endorsement of the note to the assignee.

Because in most instances there is an assignment, any mishap with an endorsement – either on the note itself or via allonge, should be of no consequence.  Such is the point that makes this ruling so consequential.  Of course, in the absence of an assignment, endorsement or delivery will remain dispositive factors.

But this case really helps regarding one meaningful scenario.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures , LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.

Related News

15 May 2024 | Mortgage Lender and Servicer Alerts

Late Filing Of Information With Financial Services Dismisses Foreclosure!

15 Apr 2024 | Mortgage Lender and Servicer Alerts

Acceleration (And Statute Of Limitations) – Stronger Than Death

• Define: Assignment Of Mortgage

Assignment of Mortgage:

A legal process in which a mortgage lender transfers the rights and obligations of a mortgage loan to another party. This transfer typically occurs when the original lender sells the mortgage to a different financial institution or investor. The assignment of a mortgage involves the transfer of the mortgage note, which represents the borrower’s debt, as well as the mortgage lien , which is the lender’s security interest in the property. The new party, known as the assignee, assumes all rights and responsibilities associated with the mortgage, including the collection of payments and enforcement of the terms and conditions. The assignment of a mortgage is typically documented through a written agreement or assignment of a mortgage form, which is recorded in the public records to provide notice to all interested parties.

An assignment of mortgage is a legal document that transfers the rights and obligations of a mortgage from one party to another. This document is typically used when a mortgage lender wants to sell or transfer the mortgage to another entity, such as another lender or an investor.

The assignment of a mortgage must be in writing and signed by both the assignor (the party transferring the mortgage) and the assignee (the party receiving the mortgage). It must also include specific details about the mortgage, such as the original mortgage amount, the property address, and the names of the original borrower and lender.

Once the assignment of a mortgage is executed, the assignee becomes the new mortgage holder and assumes all rights and responsibilities associated with the mortgage. This includes the right to collect mortgage payments, enforce the terms of the mortgage, and foreclose on the property if the borrower defaults on the loan.

In order for the assignment of a mortgage to be valid and enforceable, it must be recorded in the public records of the county where the property is located. This ensures that the assignment is publicly known and provides notice to any interested parties, such as subsequent purchasers or lienholders.

Overall, an assignment of mortgage is a legal mechanism that allows for the transfer of a mortgage from one party to another, providing a means for lenders to sell or transfer their mortgage assets.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 11th April 2024.

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

• Page URL: https://dlssolicitors.com/define/assignment-of-mortgage/
• Modern Language Association (MLA): Assignment Of Mortgage. dlssolicitors.com. DLS Solicitors. May 22 2024 https://dlssolicitors.com/define/assignment-of-mortgage/.
• Chicago Manual of Style (CMS): Assignment Of Mortgage. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/assignment-of-mortgage/ (accessed: May 22 2024).
• American Psychological Association (APA): Assignment Of Mortgage. dlssolicitors.com. Retrieved May 22 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/assignment-of-mortgage/

Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.

Second Department Once Again Finds that Evidentiary Failures Regarding Lender’s Standing in Mortgage Foreclosure Action Warrant Reversal of Judgment of Foreclosure and Sale 

• Posted on: Mar 25 2022

By Jonathan H. Freiberger

This Blog has frequently written about numerous different issues regarding residential mortgage foreclosure.  One recurring issue relates to the evidentiary proof necessary for the lender to satisfy its prima facie foreclosure case and/or to demonstrate its standing to commence its foreclosure action (when the borrower raises standing as a defense).  [Eds. Note: such issues have been discussed in this Blog, inter alia , [ here ] and [ here ].]

In order to “establish prima facie entitlement to judgment as a matter of law in an action to foreclose a mortgage, a plaintiff must produce the mortgage, the unpaid note, and evidence of default.”  M&T Bank v. Barter , 186 A.D.3d 698, 700 (2 nd Dep’t 2020) (citations omitted).  However, where “a plaintiff’s standing to commence a foreclosure action is placed in issue by the defendant, it is incumbent upon the plaintiff to prove its standing to be entitled to relief.”  Wells Fargo Bank, N.A. v. Arias , 121 A.D.3d 973, 973-74 (2 nd Dep’t 2014) (citation and internal quotation marks omitted).  A lender establishes standing in a foreclosure action “by demonstrating that, when the action was commenced, it was either the holder or the assignee of the underlying note.”  U.S. Bank National Association v. Seeley , 177 A.D.3d 933, 935 (2 nd Dep’t 2019) (citations omitted).  “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the underlying mortgage passes with the debt as an inseparable incident.”   Dyer Trust 2021-1 v. Global World Realty, Inc. , 140 A.D.3d 827, 828 (2 ND Dep’t 2016) (citations omitted).  As the Court of Appeals explained in Aurora Loan Services, LLC. V. Taylor , 25 N.Y.3d 355 (2015):

… it is not necessary to have possession of the mortgage at the time the action is commenced. This conclusion follows from the fact that the note, and not the mortgage, is the dispositive instrument that conveys standing to foreclose under New York law. In the current case, the note was transferred to Aurora before the commencement of the foreclosure action—that is what matters. A transfer in full of the obligation automatically transfers the mortgage as well unless the parties agree that the transferor is to retain the mortgage  Any disparity between the holder of the note and the mortgagee of record does not stand as a bar to a foreclosure action because the mortgage is not the dispositive document of title as to the mortgage loan; the holder of the note is deemed the owner of the underlying mortgage loan with standing to foreclose.

Aurora , 25 N.Y.3d at 361 – 362 (citations, internal quotation marks and brackets omitted).

Whether the lender satisfied the evidentiary requirements of proving standing was one of the issues decided on March 23, 2022, by the Appellate Division, Second Department, in Wells Fargo Bank, N.A. v. Farfan .   The borrower in Farfan borrowed $300,000 and secured his repayment obligation with a mortgage on property in Queens County.  In 2007, the lender commenced a foreclosure action upon the borrower’s default.  In his answer, borrower, among other things, asserted as a defense that the lender lacked standing to foreclose.  The lender’s motion for, inter alia , summary judgment on its complaint, striking the borrower’s answer and for an order of reference was granted by supreme court in 2018.  A judgment of foreclosure and sale was entered in 2020 (the “Judgment”).  On the borrower’s appeal, the Second Department reversed the Judgment and denied the lender’s motion for summary judgment on the complaint, to strike the borrower’s answer and for an order of reference.  

After discussing the legal issues discussed below, the Court addressed the sufficiency of the lender’s proof of standing and stated:

Here, in support of its motion, the [lender] submitted an affidavit of Teri L. Townsend, who averred that, in her position as vice president of loan documentation for the [lender], she had access to and was familiar with the business records related to the mortgage loan at issue. She averred that the records were maintained in the ordinary course of business, and were “made at or near the time of the occurrence of the matters recorded by persons with personal knowledge of the information in the business record, or from information transmitted by persons with personal knowledge.” Townsend further averred that, based on her review of the [lender]’s “correspondence with the custodian regarding this loan, LaSalle Bank National Association, as prior custodian, was in possession of the original Note on October 24, 2007, the date the Complaint was filed.” However, Townsend failed to specify which entity generated the subject correspondence, and, to the extent the correspondence was not generated by the [lender], failed to state that she was familiar with the record-keeping practices and procedures of the entity that generated the correspondence, or that the correspondence was incorporated into the [lender]’s own records and routinely relied upon by the [lender] in its own business.

The Court further found that the lender’s proof would have still been inadequate even if it laid a “proper foundation for the admissibility of the unspecified correspondence she relied on” because “Townsend failed to identify the records upon which she relied in making the statements, and the [lender] failed to submit copies of the records themselves” noting that “[i]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted.”  (Citations, internal quotation marks and brackets omitted.)

Finally (as is relevant to this article), the Court found that the lender failed to establish two additional facts critical to the lender’s standing claim:

While the plaintiff’s submissions established a chain of assignments of mortgage ending with the plaintiff’s alleged predecessor in interest, Norwest Mortgage, Inc., the last assignment in the chain does not indicate that the subject note was assigned together with the subject mortgage. Further, the plaintiff failed to submit evidence to establish that its immediate predecessor by merger, Wells Fargo Home Mortgage, Inc., was formerly known as Norwest Mortgage, Inc., as indicated in the caption on the complaint in this action, or whether Wells Fargo Home Mortgage, Inc., merged with Norwest Mortgage, Inc., as Townsend averred. Thus, the plaintiff also failed to establish its standing as assignee of the note prior to commencement. 

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.