posted 12-17-2001 01:24 PM
If I am reading this correctly the question is regarding an Endorsement Guarantee which is different from an endorsement.
An Endorsement Guarantee is an added endorsement which the bank places after the required endorsement and guarantees that the endorsement is valid. Besides guaranteeing the endorsement,it may have additional verbage requesting the payee bank to issue a cashiers check payable to your bank. A bank officer also signes the guarantee.
This allows a person to take it to the bank it is payable on, and negoiate it. With this guarantee the payee bank is guaranteed that the check is properly endorsed and the guarantee bank accepts the liablility that funds are being given to the correct payee.
This is done in cases where a check is made payable to a business and has been returned NSF. With the guarantee of endorsement your customer can take the check to the other bank and exchange it for a cashiers check, rather than keep sending it through transit. It says that the person presenting the check is authorized to do business on behalf of the company the check is made payable to. By physically presenting the item they are ahead of any items coming through transit that day.
Or, the check is made payable to an individual and you do not want to give immediate credit for the amount of the check. Your customer can take it to the other bank and exchange it for a cashiers check which you would give them immediate credit on.
With the guarantee, all the payee bank has to be concerned with is that the funds to pay the check are available.