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.

Tags: allonge, assignment, servicer
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