“Files needing a corrected endorsement or assignment will not follow the Wells Fargo policy of returning exception files to the Attorney after 48 hours. These files will be held with Wells Fargo until the follow-up actions are completed to get the corrected documents.”
Now I’m no attorney or UCC expert, but it seems to me that a “corrected endorsement” on a promissory note is basically a new endorsement. And a new endorsement is an attempt to change the fact of which party (if any) to whom a note was–or was not–negotiated. (NOTE: for a discussion of why negotiation is crucial, see “How Negotiability Has Fouled Up the Secondary Market, and What To Do About It“). And that fact–namely, to whom was a note negotiated–is central to foreclosure defense (or offense, of course). The argument in foreclosure defense is essentially that any “corrected”–read “new”–endorsement is unacceptable come foreclosure time. That is likely why Naked Capitalism’s Wells Fargo whistleblower was apparently somewhat of a stickler when he was reviewing documents for Wells Fargo (probably as part of what the Wells Fargo manual refers to as the “WFHM Executable Team”):
“The whistleblower estimated that 99.5% of the notes that he reviewed that had been securitized failed the bank’s tests, and roughly 10% to 15% of the bank owned mortgages were tagged as ‘fails’.”
Indeed, an endorsement can’t really be “corrected” without becoming an altogether new endorsement. Endorsements are made up of only a few words, i.e.:
PAY TO THE ORDER OF
NAME OF BANK OR BANK ENTITY
That blank can be either left empty–known as an endorsement “in blank” (or “to blank”)–or the name of a natural or corporate person can be written on that blank. For foreclosure purposes (from a bank like Wells Fargo’s perspective), the only ways to “correct” this part of any endorsement would be to either: 1) erase the name that was originally in the blank (or insert a name into the blank that wasn’t in the blank before); or 2) change the name of the endorsing bank or bank entity . Either way, this “correction” completely changes the endorsement and hence changes the party entitled to foreclose. Which is the idea, one supposes.
After the elements of endorsement listed above, there is the name of a natural person above their title in the bank or bank entity said natural person is supposedly authorized to endorse the note for, like this:
BY ___JOHN DOE__________________
TITLE WITHIN BANK OR BANK ENTITY
“Correcting” either of these elements also creates a new endorsement, in my non-attorney opinion.
In other words, what the Wells Fargo manual refers to as “corrected” endorsements is essentially an obfuscatory term for a new–and almost certainly legally invalid–endorsement that is an attempt to negotiate a note long after it should have been negotiated.
IMPORTANT NOTE/DISCLAIMER: The above article is not legal advice and was not written by an attorney. It is merely a collection of common-sense, rational observations written by a sane, rational layperson with common sense. It is recommended that you consult with an attorney for any and all legal advice and/or action.