Answer:
by Brian Crow: The correct exception reason for placing a hold on a check with a missing endorsement is - Reasonable cause to doubt collectability, Missing Endorsement.
However, since the time frame for a check to be returned without entry for endorsement issues can be up to three years depending on your state's Uniform Commercial Code, if you are that concerned about an endorsement on a check, you would be better served to refuse the deposit until the correct endorsement is obtained.
Answer:
by Ken Golliher: I'm not certain what fact situation you are posing, but assuming a check has been returned to you:
If a check is returned to your bank "endorsement missing" and you obtain the endorsement prior to re-depositing it, there is no exception hold available to you. The check had a defect, but the defect has been cured.
If you are posing a situation where you have accepted a check for deposit with no endorsement and want to place a hold for that reason, I'll suggest that's not very logical. Under the UCC, your bank automatically guarantees the missing endorsement. State law varies, but the actual payee of the check could come back to you one to three years later claiming the funds were never received. A 7 day hold for "unable to verify endorsement" doesn't amount to much in the face of a return time measured in years.
Answer:
Editor's comment from John Burnett: Exception holds for redeposited checks can not be used if the reason the check was originally returned unpaid is that an indorsement was missing (see Regulation CC § 229.13(c)(1)) or that the check was post dated (§ 229.13(c)(2)).
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