Demand to See Your Original Promissory Note if You Are Facing Foreclosure

You should demand to see your original promissory note if you are facing foreclosure of your home because only the party that holds the original note is allowed to sue you.

If you bought a home, you probably didn’t pay cash for it unless you are wealthy or you did a great job of saving money.  Instead, like most people, you probably borrowed money and put your home up as collateral.  To do this, you signed at least two documents; a promissory note and a mortgage.  The promissory note is just a fancy term for an IOU (I Owe You).  If you stop making payments on the promissory note, the mortgage allows the bank to sue you and show a court that they can sell your house and use the money to pay off your promissory note.  That’s called a foreclosure.

If prepared properly, the promissory note is a “negotiable instrument.”  That just means the bank can sell the promissory note that you signed to other companies and let them worry about collecting money from you.  In exchange for the hassle of collecting money from you and the risk that you may not pay, the bank offers the buyer of your promissory note a discount.  So even though you may owe the bank $200,000 on the note, the bank might sell it for $190,000.  They don’t mind losing out on the $10,000 because it might cost them that much to collect the money from you but also they will get $190,000 in their hand right away from the buyer of the note instead of waiting 15 or 30 years, or for however long your mortgage is, to collect it from you.

The buyer of the note becomes what is called a “holder” because they hold your note as the owner of it.  A holder has a special right to collect from you right away if you don’t pay.  But only the holder of an original promissory note can collect from you.  A promissory note can change many hands as it is bought and sold.  Anyone along the way could have made a copy of the note so only the holder of an original promissory note can collect from you.  The original is the promissory note that you signed in ink rather than just a photocopy.

The negotiable instrument market was booming during the last decade or so.  Notes were exchanging hands so many times that sometimes the originals were lost and banks only had copies.  When the bank would go to foreclose on an unpaid promissory note, however, many times they could only find a copy.  That posed a problem for them because courts worried that the holder of the original note may also show up to collect from you as well.  So courts began demanding that banks produce the original to show that they are the “real party in interest,” meaning that they are the only one who can sue you for not paying on the note.

That’s why you should demand to see your original promissory note if you are facing foreclosure.  If the holder, often a bank you did not get a loan from, wants to collect all the money you owe because you have not been paying, the bank could lose their case right away if they do not have the original promissory note that you signed.  They have to prove to the court that only they can sue you and they can only do so by showing they hold the original promissory note.

This post is also available in: Spanish

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4 Responses to Demand to See Your Original Promissory Note if You Are Facing Foreclosure

  1. Alex Kremenchutsky July 29, 2014 at 11:07 pm #

    The bank lost my promissory note, I am not in foreclosure do I still have to pay my mortgage ?

  2. jackie testa December 12, 2014 at 3:06 pm #

    Judge in Husdon County just granted banks attorneys summary judgement, they only had to produce a copy of the note, i still think they dont have the original but what can i do. this is an old countrywide loan that was a mers loan

  3. Fariouz January 14, 2015 at 1:58 pm #

    If bill demands the holder (bank) to produce the original note, how would Bill go about seeing it? Do the holder say come to the bank and we’ll show you? How does that process work?

  4. alan broder March 20, 2015 at 8:57 pm #

    My bank servicer told me they have my original promissory note in their possession. I asked to view it at their bank in person with my note examiner and they refused to let me. I then asked them to send me a sworn affidavit as to the fact that they have my original note and they refused to do that. I then sent them another request to just send me a certified letter as to the fact that they have my original promissory note in their possession and they refused that also. All those three separate requests by me were registered certified letters and also QWR requests. Now they filed a foreclosure on me. Do I have any case against them with this? I also have a MERS mortgage that was registered to them in the MERS Inc. corp.

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