COA: Stamp Evidencing Transfer of Note Must Be Signed In Order to Be Effective
Here the borrower claimed that the foreclosing party, U.S. Bank National Association, was not the legal holder of the Note and could thus not foreclose on her property. The Note was transferred several times before coming into the possession of U.S. Bank. The evidence of transfer of the Note between previous holders Mortgage Lenders and Emax Financial Group included a stamp but did not include a signature of an authorized representative transferring it. Emax then transferred the Note to Residential Funding Corporation, and Residential transferred it to U.S. Bank. All other stamps showing transfers of the Note between various parties bore handwritten signatures of the individuals with authority to effect the transfers.
The COA held that a stamp may constitute a valid indorsement of a note, but only if the stamp is executed by a person having the intent and authority to do so. U.S. Bank did not introduce any evidence to establish that the stamp purportedly indorsing and transferring the Note from Mortgage Lenders to Emax was an authorized signature. U.S. Bank introduced only the Note itself which bore a stamp stating "PAY TO THE ORDER OF: EMAX FINANCIAL GROUP, LLC, WITHOUT RECOURSE, BY: MORTGAGE LENDERS NETWORK USA, INC. This stamp was unsigned. The stamp itself did not count as a signature because the person placing the stamp must act with authorization and with the intent to indorse the instrument in order to effect a valid transfer. The stamp at issue only showed the name of Mortgage Lenders, but did not contain a countersignature indicating the capacity in which the signor acted in executing the stamp on behalf of Mortgage Lenders. The COA deemed the lack of signature evidencing of authority of an individual executing the stamp "a troublesome omission," and held that U.S. Bank had thus not presented sufficient evidence that it was the holder of the Note.