Editor: David Reiss
Brooklyn Law School

November 22, 2013

Indiana Court of Appeals Holds HSBC Assignment Valid Despite Blank and Undated Allonge

By Devon Avallone

In Buchanan v. HSBC Mortg. Servs., 993 N.E.2d 275, 2013 Ind. App. LEXIS 404, 2013 WL 4507932 (Ind. Ct. App. 2013), the Indiana Court of Appeals held that HSBC had the right to foreclose on the homeowners’ mortgage, dismissing homeowners’ allegations that the HSBC assignment was unauthorized. The Buchanans procured a loan from Accredited Mortgage Lenders in 2006, which named MERS as mortgagee and nominee. Later that year, MERS sold the loan to HSBC, who began foreclosure proceedings in 2008 after the homeowners defaulted. HSBC’s motion for summary judgment was granted in 2012, which homeowners appeal from here. The Indiana Court of Appeals upheld the decision of the trial court, finding that the homeowners presented no evidence that MERS lacked authority to assign the note and mortgage. The Buchanans alleged that the assignment was rendered invalid because an endorsement was not attached to the note in the complaint, and because the allonge was blank and not dated. However, the court held the assignment was valid and endorsed to HSBC in blank under Indiana Code Section 26-1-3.1-109(a)(2) which states “A promise or order is payable to bearer if it: . . . (2) does not state a payee,” showing that HSBC was the holder of the “bearer instrument” pursuant to Indiana Code Section 26-1-3.1-301(1). The court further found no evidence that the allonge was not affixed to the note, and states that HSBC is permitted to amend its complaint to attach the allonge to the note. Homeowners also failed to produce evidence that the signatory of the HSBC assignment lacked authority to sign on behalf of Accredited. Ultimately the court found that no issue of genuine or material fact existed.

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