FROM FAQ: Allonge, assignments and moving the note and mortgage around

QUESTION:

1.  A friend of mine let me see his papers he received from the Attorney’s office that’s the trustee for a bank that’s foreclosing on him.  One of the papers that sent was titled Allonge.  On the paper it says:

PAY TO THE ORDER OF

NEW CENTURY MORTGAGE COMPANY
_______________________________________
without recourse

Company Name:  ACE MORTGAGE FUNDING LLC

by:  Robert Gregory, Jr.  Vice President

Can you explain what that really means?

2.  Also, the paperwork says the original lender for this loan was Ace Funding Mortgage LLC.  The loan has now been assigned to US Bank National Association, as Trustee for Asset-Back Pass-Through Certificates, Series 2006-NCS, and their mailing address is in care of America’s Servicing Company 3476 Stateview Blvd…..

Can you give me a brief explanation what all this means.

ANSWER: ALLONGE IS A FRENCH TERM (THEY ARE FOND OF THOSE ON WALL STREET), WHICH BASICALLY IS USED BECAUSE THERE IS NO PLACE TO WRITE ON THE FACE OF THE NOTE. THE INDORSEMENT (technically the correct spelling when used in connection with negotiable instruments)

This allonge says that ACE MORTGAGE FUNDING LLC, posing as the lender (FALSELY, AND RECEIVING A FEE FOR LENDING ITS LICENSE TO A NON-LICENSED OR CHARTERED ENTITY) in your transaction, assigned its interest in your note and mortgage to NEW CENTURY MORTGAGE COMPANY, which also was not the lender. You can liken this to getting a check from someone, and then signing it over to someone else. Whether the signatory on the allonge “Robert Gregory” was really the name of anyone who works there I do not know. It often is revealed that this is not the case. In fact it is often revealed that these assignments, Allonges etc. are created for your benefit long after the date of the allonge.

The date on the allonge is either before or after you closed on your loan transaction. If it is before, then they assigned an interest they did not yet have. If it was after it was probably within days of your loan closing. This would show that ACE was a stand-in for the real source of the funding, which you might think from these documents was New Century, but that would probably not be correct.

You say “The loan has now been assigned to US Bank National Association, as Trustee for Asset-Back Pass-Through Certificates, Series 2006-NCS”. Whether it was actually assigned and if so, how, is not known by you and apparently not known at all. There is probably an assignment and assumption agreement around somewhere and a pooling and services agreement around somewhere that will identify the real purpose of these parties. But the “trustee” does not actually own the mortgage and note either sicne the it is the actual owners of mortgage backed securities to whom the mortgages and notes are pledged. Whether any assignment was recorded is also an open question. Usually they are not, which is illegal in most states. This creates an odd anomoly — the mortgage of record is in the name of ACE and the note is travelling at light speed toward parts unknown with each successive transfer, transmittal or assignment. The effect of this is that what was rare under the Uniform Commercial Code has become commonplace. Ordinarily the note follows the mortgage and mortgage follows the note. But for reasons too extensive to report here, the note is split off from the mortgage because the players have other plans for it, including changing its terms, and changing the allocation of payments on the note.

And then you say “and their mailing address is in care of America’s Servicing Company 3476 Stateview Blvd….” This means that US Bank is not really doing anything here except acting as conduit and that it too has no real interest in the note and mortgage because it too was not the source of funding. Generally the law follows the money. So whoever was the actual source of the funding is the one who should be repaid. This is called the holder in due course under ordinary circumstances but these are not ordinary circumstances. The note is being held by any number of people other than the source of funding who has received a certificate and prospectus stating the the entire beneficial interest on the notes and mortgages in the pool are pledged to him, but that the specific notes and mortgages could be different than the original list, probably will be different, and that substitutions will occur. In other words they are selling the certificates before they actually have loan closings based upon signatures that have not yet been executed in loan closings that have not yet occurred.

America’s Servicing Company is obviously serving as the mortgage loan servicer, which means they are appointed by someone, with or without authority to do so, to collect your mortgage payments. They were created as yet another layer for you to penetrate when you attempt to asert or claims and defenses against the people who were present at the original closing.

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9 Responses

  1. Emma you mentioned you had received a some papers which was signed by Wayne Lee, CEO and Karen Christensen, CFO. Do you still have the signatures? Please advise.

    Thanks,

  2. I just had a great case in California, the servicer tried to lift the automatic stay. We opposed it on standing and real party in interest grounds (we won). They told the judge “we forgot to attach the allonge” even though there is ample space on the note and even the adjustable rate rider to do an endorsement. At any rate, you have to look at these things closely, they assume most people don’t challenge it. Check out the Veal case. Good one to look at.

    Steve Vondran
    California Foreclosure Defense Lawyer

  3. In July, my foreclosure was thrown out without prej. due to not showing ownership. I just recently received a pack of papers with a page attached the says pay to the order of HSBC Bank (USA) without recourse Ameriquest Mortgage Company. It was signed by Wayne Lee, CEO and Karen Christensen, CFO. There is no date. No mention of being an allonge. No notary seal. The HSBC Bank (USA) was pasted into the the area below pay to the order, which is evident by it blanking out part of the words above and below. I have no idea if the signatures were written by the same person or if they were blue ink. I am seeking hep this Friday but was curious of other’s opinions. Is this a legit item?

  4. I used to work for Ace Mortgage. They were a mortgage banker but they never funded their own loans. Neil is also correct that New Century also was not a lender but they too were a pretend table top funder. If you want to know who the real lender was the party that actually funded your loan you need to go to the title company that closed your loan and asked them for a copy of the wire confirmation that funded your loan. They will have it. I closed on my loan 10 years ago and the title company still had it. Now that you know Ace Mortgage and New Century are not real lenders but mortgage brokers you need to check your Good Faith Estimate and your HUD1 Settlement statement. I am sure they did not as required by RESPA list the yield spread premium they received from the real lender. Major TILA violation.

    I disagree with Neal in that the mortgage does not follow the note. I know this is what the lenders are doing and recording in the register of deeds but this does not make it right. The mortgage should always follow the note if it does not than note is separated from the mortgage making both the note and the mortgage voidable. See, U.S. Supreme Court Carpenter v. Longan, 83 U.S. 16 Wall. 271 271 (1872)
    “The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”

    More quotes from this case:

    · “All the authorities agree that the debt is the principal thing and the mortgage an accessory.”

    · “There is no departure from any principle of law or equity in reaching this conclusion.”

    · “The fallacy which lies in overlooking this distinction has misled many able minds, and is the source of all the confusion that exists. The mortgage can have no separate existence. When the note is paid the mortgage expires. It cannot survive for a moment the debt which the note represents.”

    More quotes from this case:

    “We think the doctrine we have laid down is sustained by reason, principle, and the greater weight of authority.”

  5. We live in Ohio and Duetch Bank is trying to foreclose on our home. We never signed anything to Duetch Bank, it was transfered by Popular Financial Services through the use of an Allonge. However the Allonge is not dated nor is there any mention of the land parcel or amount of equity transfered. Nor corporate seal, or anything showing authenticity of Bank Officers signature or authority to sign. Any advice you have be be greatly appreciated.

  6. Neil do you go to court as a witness? Thanks Earl

  7. What if PAY TO ORDER of is blank?

    Alina

  8. WELL I MUST SAY THAT I AM A VICTIM OF THIS. 1. BERKSHIRE LENT THE $ THEN IT WAS TRANSFERED TO THE FIRST NATIONAL BK OF NEVADA IN BETWEEN THAT IT WENT FST NAT BK OF AZ 2. SOMEHOW IT WAS RE-TRANSFERED TO BK TO FST NAT BK OF NEV WITHOUT RECORDING FST NAT BK OF AZ ASSIGNMENT. I SAW IN THE FORECLOSURE PAPERS- PAY TO THE ORDER OF FST NAT BK OF NEV WITHOUT RECOURSE. THEN THE LOAN WENT TO HOMECOMINGS. THEN JP MORGAN CHASE STEPPED IN AS TRUSTEE. I AM TRYING TO FIGHT BUT I NEED A LAWYER WHO COULD PUT THIS TOGETHER. ANY LAWYERS IN NYC?

  9. America’s Servicing Company is owned by Wells Fargo as I had them service a previous mortgage

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