On April 28, 2016 Judge Lizabeth Gonzalez of the State of New York, denied Wells Fargo the right to foreclose against home owner Wakelyn Phillips. The denial basically means that the bank cannot demand payments from the homeowners for the mortgage. The judge made this decision based on a simple and basic premise that to foreclose on a property the bank must have both a properly endorsed and held note and mortgage. The idea of having both the note and mortgage goes back nearly two hundred years, however due to the onset of Mortgage Electronic Registration Systems (MERS) and other forms of electronic assignments by the banks; basic rules have been bent and adjusted to give standing to the five major banks that hold 75% of the mortgages in this country. One of the oldest rules that Judge Gonzalez relied on was the Allonge. An Allonge is a permanently affixed paper to the note that allows for endorsements. The Allonge goes back nearly two hundred years as well, in that as a property went from homeowner to homeowner, bank to bank, there would not be enough room on the original note for signatures so an extra piece of paper was affixed to the note to allow for additional endorsements i.e. the allonge.
New York has strict rule in that if there is enough room on the note the endorsement must be on the note. If there is not enough room on the note for an endorsement, the allonge must be permanently affixed to the note with the endorsement. Case law varies if a paper clip is considered permanently affixed or a staple, but in this case there was enough room on the note and it was not endorsed and the allonge (blank paper for the endorsement) was not even paper clipped to the note. Hence the note was not properly endorsed therefore the bank failed to prove that they had the note and mortgage to the property. As great as this decision is, on May 25, 2016 Wells Fargo filed a Notice to Appeal the Court’s decision to the First Department of New York. Look for future postings. In re Wells Fargo Bank N.A as Trustee for Securitized Asset Backed Receivables LLC 2005 FR4 Mortgage Pass Through Certificates, Series 2005-FR4 v Wakelyn Phillips et al Index No. 35292/2015 E Sup Ct of New York County of Bronx.
To view the order – click here.