Standing to Foreclose Even if Allonge to Note Is Not Affixed

On Sept. 9, the New Jersey Appellate Division, in an unpublished decision, found that the plaintiff in a commercial foreclosure action had established a prima facie case for foreclosure even though the allonge to the note was not physically attached when the allonge was initially executed. In U.S. Bank National Association v. Morris Bayonne Associates I, No. A-2279-13 (App. Div. Sept. 9, 2015), the court upheld the trial court’s granting of summary and final judgment for foreclosure in favor of U.S. Bank, after determining that U.S. Bank had adequately proven its standing to foreclose.

In Morris Bayonne, several LLCs entered into a loan agreement and executed a promissory note in 2007. They also executed a mortgage on commercial property, an assignment of rents and leases, and a security agreement and fixture filing to secure the loan. Two individuals guaranteed the note. The note, mortgage and all loan documents were assigned twice, the second time to U.S. Bank. The mortgage and assignments were properly recorded. When the loan documents were assigned to U.S. Bank, the allonge endorsing the note was not attached immediately to the note. Four years later, the special servicer for U.S. Bank obtained permission from U.S. Bank to attach the allonge to the note. Eight days after the allonge was attached to the note, U.S. Bank commenced a foreclosure action due to the defendants’ default under the terms of the note. Therefore, the allonge was affixed to the note prior to the filing of the foreclosure complaint. U.S. Bank filed a motion for summary judgment, which was supported by certifications and affidavits from two employees of the special servicer for U.S. Bank. The defendants opposed the motion, challenging U.S. Bank’s ownership of the note and raising a series of questions concerning the legitimacy and veracity of the affidavits and certifications. The court adjourned the motion to allow the defendants to depose the employees of the servicer. One of the employees was overseas for an extended period and was unavailable; however, the defendants did not request additional time to depose him.