Ever wondered, “What is an allonge?” Learn the definition of this important document and how it is used in mortgage note investing.
Let us start first with an assignment of mortgage (AOM), which transfers the mortgage or deed of trust from seller to buyer. Well, there is a similar companion document to a promissory note called an allonge.
An allonge is a document that transfers ownership of a promissory note. It is an endorsement which allows the lender to collect on the note. It also one of quite a few documents needed as part of a collateral file and is needed when performing due diligence when buying a note.
When Would an Allonge Be Needed?
For example, say if someone is wants to refinance a property to complete home improvement renovation to a kitchen or bathroom. This would create a new note and a new allonge to go along with that note.
Usually, allonges come as separate pieces of paper from the note itself. Often, it is a simple one-page letter created by the note seller and generally goes with a note.
Some allonges and assignments of mortgage are together on one document and are known as integrated assignments.
What Is Included in an Allonge?
An allonge will list the name of the lender and borrower. It will also include the date of original note. In addition, it will show the property/collateral address. It will also show the amount of the note.
An allonge is signed by the note seller. However, it is not recorded in county of where the property is located, it so does not need to be notarized.
A new allonge should be created every time the loan has been bought and sold. A missing allonge is not a major problem when buying or selling a note, since the allonge is not recorded with the county. A new allonge can be created and signed by the note seller.
You Also May Want to See:
- CFD vs. Mortgage/Deed of Trust – What’s the Difference?
- Unlocking Cash Flow: Harness Mortgage Note Investing and Be Your Own Bank
- Demystifying Mortgage Note Investing: How to Get Started Now!
- 8 Ways to Make Money with Real Estate Note Investing
- Struggling Wholesalers to Thriving Note Investors – Our Story
