Selling Guide

Published December 4, 2018

B8-3-04: Note Endorsement (02/23/2016)

This topic contains information on note endorsement, including:

Note Endorsement

The originating lender must be the original payee on the note, even when MERS is named as nominee for the beneficiary in the security instrument. The note must be endorsed to each subsequent owner of the mortgage unless one or more of the owners endorsed the note in blank. The last endorsement on the note should be that of the mortgage seller. The mortgage seller must endorse the note in blank and without recourse.

For example:

PAY TO THE
ORDER OF WITHOUT RECOURSE LENDER’S NAME (Authorized Signature)
NAME OF AUTHORIZED SIGNER TITLE OF AUTHORIZED SIGNER

Using an Allonge for the Endorsement

The endorsement must appear on the note. An allonge may be used for the endorsement as long as the following requirements are met:

  • The form and content of the allonge used must comply with all applicable state, local, or federal law governing the use of allonges and result in an enforceable and proper endorsement to the note.

  • The allonge must be permanently affixed to the related note and must clearly identify the note by referencing at least the name of the borrower(s), the date of the note, the amount of the note, and the address of the security property.

  • The note must clearly reference the attached allonge.

  • Fannie Mae’s status as a “holder in due course” must not be impaired.

Any subsequent endorsements should be, but are not required to be, placed on the allonge.

The lender must indemnify Fannie Mae (as described in A2-1-03, Indemnification for Losses) for any losses incurred by Fannie Mae as a result of the use of an allonge for the note endorsement(s).

Signature Requirements for Endorsements

The endorsement should be signed only by those persons specifically authorized to execute documents in the lender’s behalf. Signatures must be original, except that Fannie Mae accepts a lender’s facsimile endorsement of notes for those jurisdictions in which the lender has determined that such endorsements are valid and enforceable.

A lender that chooses to use facsimile signatures to endorse notes must warrant that the endorsement is valid and enforceable in the jurisdiction(s) in which the security properties are located and must retain in its corporate records the following specific documentation authorizing the use of facsimile signatures:

  • legal opinions related to the legality and enforceability of facsimile signatures for each jurisdiction in which the lender uses them;

  • a resolution from the lender’s board of directors authorizing specific officers to use facsimile signatures, stating that facsimile signatures are a valid and binding act on the lender’s part, and authorizing the lender’s corporate secretary to certify the validity of the resolution, the names of the officers authorized to execute documents by using facsimile signatures, and the authenticity of specimen forms of facsimile signatures;

  • the corporate secretary’s certification of the authenticity and validity of the board of director’s resolution;

  • a notarized certification of facsimile signature, which includes both the facsimile and the original signatures of the signing officer(s) and each officer’s certification that the facsimile is a true and correct copy of his or her original signature.

The mortgage seller may not delegate to an attorney-in-fact its authority to execute an endorsement. The endorsement may not be executed by a party using a power of attorney.

Related Announcements

The table below provides references to the Announcements that have been issued that are related to this topic.

Announcements Issue Date
Announcement SEL-2016–02 February 23, 2016
Announcement SEL-2011–13 December 20, 2011