Buchanan v. HSBC Mortgage (IN)

Summary: Assignment of a note is valid despite blank and undated allonge.


Buchanan v. HSBC Mortgage Servs., Inc., 993 N.E.2d 275 (Ind. Ct. App. 2013).


Facts: In July 2006, Roger Buchanan and Susan Buchanan (the “Homeowners”) signed a promissory note and mortgage for the purchase of a house in Madison, Indiana. The original lender was Accredited Home Lenders, Inc. (“Accredited”) and the mortgage listed Mortgage Electronic Registrations Systems, Inc. (“MERS”) as the mortgagee and nominee of Accredited and its successors and assigns. In 2006, Accredited sold the note to HSBC Mortgage Services (“HSBC”). In November 2007, the Homeowners stopped making their monthly mortgage payments. On December 19, 2008, MERS as nominee of Accredited assigned its interest in the mortgage to HSBC.

On December 29, 2008, HSBC sought to foreclose against the Homeowners. In October 2012, after a hearing on the summary judgment motions, the trial court entered judgment for HSBC. The trial court found and concluded that MERS as nominee of Accredited assigned its interest in the mortgage to HSBC and had the authority to do so. In addition, the court found that HSBC is both the holder of the note and the mortgagee of the mortgage that is the subject of this dispute.


Holding: Affirmed. On appeal, the Homeowners argued that HSBC was not the holder of the note because the assignment of the note was rendered invalid because an endorsement was not attached to the note in the complaint, and because the allonge was blank and not dated. The appellate court affirmed the lower court’s finding that no issue of genuine or material fact existed and that “the undisputed designated evidence shows that Accredited transferred the note to HSBC in 2006.” The appellate court held that the assignment of the note was valid and endorsed to HSBC in blank under Indiana Code Section 26-1-3.1-109(a)(2) which states that “[a] promise or order is payable to bearer if it: . . . (2) does not state a payee,” demonstrating that HSBC was the holder of the “bearer instrument” pursuant to Indiana Code Section 26-1-3.1-301(1).

The court found that contrary to the Homeowners assertion that HSBC's failure to attach the allonge to its complaint was fatal to its claim, or that an original of a note was required to be attached to a complaint, there was no evidence in the record to indicate that the allonge was not affixed to the note. That court stated that HSBC could amend its complaint to correct the omission of a required written instrument under Trial Rule 9.2(F).

In addition, the court stated that the Homeowners failed to produce evidence that the signatory of the HSBC assignment lacked authority to sign on behalf of Accredited and that the trial court did not err when it found that HSBC was the holder of the note.


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By: ATG Underwriting Department | Posted on: Tue, 03/11/2014 - 12:22pm