WASHINGTON STATE STOP FORECLOSURE....IS YOUR ALLONGE FAKE ?

WASHINGTON STATE STOP FORECLOSURE....IS YOUR ALLONGE FAKE ?

Thinking About Allonges Under the UCC The other way the fraudsters are doing is producing fake allonge. Be vigilant on this document .

Every state adopting the latest UCC has done away with the no space test Endorsements need not be dated or notarized or witnessed in any way.  Mechanical signatures however applied are valid as long as they are wielded by one authorized to do so.
But what usually matters is the law of the place of delivery, where negotiation is completed. Many, if not most mortgage trusts are NEW YORK TRUSTS. The space test therefore matters in a disproportionately large number of cases when the matter is properly interposed as a defensive argument and properly argued. Also, the requirement to AFFIX the allonge to the note is the rule almost everywhere. Plaintiffs are routinely given a bye by even celebrated foreclosure defense attorneys who seem NOT to understand the absolute necessity that the allonge be AFFIXED.  When the allonge hasn't been affixed, the note hasn't been negotiated and the entity in possession cannot be a holder!
	Adams v. Madison - the $19 million staples - is one of my favorite allonge cases. To generalize the concept:  it says that anything that invalidates an allonge also invalidates the negotiation.  If the recipient of negotiation via invalid allonge then further transfers the note to a third party, then the note becomes unenforceable in my opinion. More.  Allonges are part of the note for the purpose of determining if an indorsement is on the note, but its also a contract.  As such I think that brings contract case law into play.  For example.  Freddie will ask "please reform this allonge" and I will argue back from contract law: - Freddie was not a party to the contract and has no standing to seek reformation. - Statute of limitations on contracts is three years (NH) and the request is barred. - Laches.  Bankers are pros who can read and should have known better sooner.

F Y I :

The two central issues which are introduced by the use of allonges are:  (a) whether allonges are permissible AT ALL under the laws of the jurisdiction in which the instrument (including the allonge) is negotiated and (b) whether the allonge is properly attached to the instrument so as to make the indorsement and negotiation valid. Permissibility Of An Allonge As to the permissibility of an allonge it should be noted that traditionally commercial law permitted the use of an allonge only where the space on the original instrument was filled up making indorsement directly on the instrument an impossibility. On my note there is SPACE no need to use an allonge. This traditional commercial approach was implicitly retained in the UCC version of 1951, but abandoned with the 1990 and 2002 UCC revisions.  But one singularly important state still uses the 1951 version of Article 3 of the UCC:  New York.  (South Carolina continued to use the 1951 version of Article 3 until 2008.  See http://www.scstatehouse.gov/code/t36c003.htm ) It should first be noted that there has been some renumbering between versions. First, take a look at the current wording of §3-201: § 3-201.  NEGOTIATION. (a)  "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder. (b)  Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder.  If an instrument is payable to bearer, it may be negotiated by transfer of possession alone. http://www.law.cornell.edu/ucc/3/article3.htm#s3-201 Indorsement is explained in § 3-204: § 3-204.  INDORSEMENT. (a)  "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words is an indorsement unless the accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than indorsement.  For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument. (b)  "Indorser" means a person who makes an indorsement. (c)  For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument. (d)  If an instrument is payable to a holder under a name that is not the name of the holder, indorsement may be made by the holder in the name stated in the instrument or in the holder's name or both, but signature in both names may be required by a person paying or taking the instrument for value or collection. * Now compare the New York language: Section 3--202. Negotiation. (1) Negotiation is the transfer of an instrument in such form that the transferee becomes a holder. If the instrument is payable to order it is negotiated  by  delivery  with  any necessary indorsement; if payable to bearer it is negotiated by delivery. (2) An indorsement must be written by or on behalf of the  holder  and on the instrument or on a paper so firmly affixed thereto as to become a part thereof. (3)  An  indorsement is effective for negotiation only when it conveys the entire instrument or any unpaid residue. If it  purports to be of less it operates only as a partial assignment. (4)  Words  of  assignment, condition, waiver, guaranty, limitation or disclaimer of liability and the like accompanying an indorsement do not affect its character as an indorsement. * With the old statutory language, it seems that New York retains the old case law which favors indorsement on the instrument itself rather than on a separate allonge, though there are not any recent New York cases precisely on point. The single best discussion and analysis of New York law relating to allonges is set forth within the journal article "Getting Attached:  When do allonges meet the requirements of the New York UCC?", by Lawrence SAFRAN and Joshua STEIN, appearing within New York Law Journal on Monday, November 27, 2006.  See:  http://www.lw.com/upload/pubContent/_pdf/pub1713_1.pdfhttp://www.lw.com/upload/pubContent/_pdf/pub1713_1.pdf

Posted by LORINA at 2:36 PM