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New post on Livinglies’s Weblog

This article was prompted by a very reasoned argument presented by CA Attorney Dan Hanacek:

Even In the Event the Court Finds the "Assignment" Valid, the Assigning of the Note to a Co-Obligor Makes it Functus Officio

"It has long been established in California that the assignment of a joint and several debt to one of the co-obligors extinguishes that debt." (Gordon v. Wansey (1862) 21 Cal. 77, 79.) "The assignment amounts to payment and consequently the evidence of that debt, i.e., the note or judgment, becomes functus officio (of no further effect)"-and precludes any further action on the note itself. Any action would not be on the note itself, but rather one for contribution. (Id.; Quality Wash Group V, Ltd. V. Hallak (1996) 50 Cal.App.4th 1687, 1700; Civ. Code §1432.) In the instant case, even if the alleged assignment is seen to be valid, then a co-obligor was assigned the note and the debt has been extinguished.

Note: the trustee of the securitized trust is a co-obligor.

Note: Fannie Mae, Freddie Mac and Ginnie Mae are co-obligors.

Note: the servicer is almost always a co-obligor.

Questions for Neil:

Have they extinguished this debt by endorsing it and/or assigning it to the transaction parties?

Does this only apply in CA? I cannot believe that this would be the case.