Pro Se Primer 101 – 1 – Terms & Documents of a Home Loan: Promissory Note, Mortgage or Deed of Trust
"Curse my eyes … The people I've seen … Crawlin ' thru the wreck of the American Dream"
Perhaps the greatest aid to illegal foreclosing parties is the word "mortgage".
In all 50 states this word is universally misused as a synonym for "home loan". Home loans have come to be known as mortgages as a slang term.
But, a mortgage is not a home loan at all. It is merely the name of an incidental, but not essential, instrument used to define the collateral that a borrower of any kind of a loan has agreed to pledge as security for repayment of a loan. The lender and borrower have agreed that the borrower's pledged collateral is to be forfeited in the event of a default. The term mortgage evolved from the fact that the home loan included the property as collateral. The mortgage described the collateral. In fact, the correct name for this type of document or instrument is "security instrument".
The term "mortgage" is used to identify the security instrument in most judicial foreclosure states. But, in most non-judicial foreclosure states it is known as a "deed of trust". In all 50 states it is the Promissory Note which binds the borrower to his debt.
Also, in all 50 states, the security instrument is only needed or used when a borrower signs a Promissory Note as physical evidence of money he has borrowed and used for the purpose that both the lending party and the borrowing party have agreed to. This security instrument (remember that it may be called mortgage or deed of trust) is used only if the borrower finishes buying back his Promissory Note (meaning paid off the house loan), or he becomes unable to pay it.
It is important to remember this because the judges of the courts do not know how real estate deals work and they are being fooled over and over by their perception of the situation and not the laws. You must get the judge to understand that the Promissory Note is not the top priority. The debt, ot money is what is real real. It was the money that paid for the house. The Promissory Note is the physical evidence that a loan of money was made. But, every foreclosing party must prove how he came to own it legally. Possession of the Promissory Note is no more proof of ownership of the loan then possession of an automobile is proof of ownership of that automobile. The proof of ownership must come from the contracts, wires, cashier checks etc. involved in the deal. The constitution says that without "concrete and particularized" proof to back up the claims of right to foreclose, that there is no right to foreclose.
You do not owe a Promissory Note to the Holder in Due Course of your loan, you owe the back the money that you received as a loan. The Promissory Note is important because it is all that exists to evidence the debt in the event that the borrower pays it all back, or fails to finish payment. We focus on directing that message to the judges. The foreclosing party as a debt collector will focus on the words of its claim and only the words and not the money it represents.
If you did not receive the money from the name lender on your Promissory Note and Security Instrument, then there is no way that any party can claim that they purchased the Promissory Note legally. The fraud is that they only say that they have the Promissory Noteaknd they don't even try to prove how they got it. Without proving this claim with "concrete and particularized" proof, then the Promissory Note that they say they have is void. A debt collector cannot collect money from someone who does not owe them any money.
The debt collector must prove he has the right to collect (foreclosure is an act of "debt collection") therefore they must also prove beyond a doubt that they paid money for your Promissory Note before they can demand that you pay them any money back. No Borrower can be made to pay someone he does not owe. I am convinced that 100% of the home loans made after 1999 or possibly even earlier named a lender that did not give the borrower any of the promised money. Yes, the borrower absolutely got the money, but from who? He should pay only the real party in interest.
The debt collector must prove it was him, or them. Once a borrower has spent the borrowed money for the purpose intended, there must be evidence of the loan and the terms of repayment. The Promissory Note is that evidence and is the essential proof that a loan has been made and is owed. If the borrower and lending party have agreed that something substantial is needed to guarantee the lending party can recover the money that was loaned by them, even if the borrower is unable to pay it back. The borrower can pledge something that he owns as that guarantee that commonly is called collateral.
Some synonyms for the word collateral are: surety, guarantee, guaranty, insurance, indemnity, backing, indemnification; as in "she put up her house as collateral for the loan"
There is a great deal of confusion caused by using the word mortgage to mean a home loan. Some of this is an innocent evolution of the term Note and Mortgage which in the past have both been part of one document or instrument.
But, today the criminal foreclosing parties (I don't use the word lender here, because very, very rarely is the foreclosing party the real lender or even the legal owner of the essential Promissory Note) are using assignments of the mortgage (or deed of trust to supposedly transfers ownership of your loan. But, they are really preying upon the common mistaken use of the word "mortgage" as slang meaning "home loan".
This is an intentional deceptive and misrepresentative act, as there is no such thing as an assignment of the mortgage ". Only the assignment of the Promissory Note can transfer the ownership of a loan. But, it is done just endorsing the Promissory Note itself, much like you endorse a check to deposit it into your bank account at your bank, or to take cash.
The mortgage, as the description and the agreement of collateral, always follows the Promissory Note as it is essential to a loan. The Promissory Note never follows the assignment of the "incidental" mortgage.
The US Supreme Court described this in the case of "Longan vs Carpenter" in 1872, and since all rulings and orders of the Supreme Court of the United States Supreme Court are binding as law on all courts in the nation. All courts are arms of the US Supreme Court.
I learned a lot of what I know beginning in 2012 from reading authors who seemed to be trying to help borrowers who were locked up in fraudulent foreclosures. Today I know that those authors while helpful. were not clear on these problems and there real intent was to find a way to make money off of the misinformed borrowers / I had an advantage over most borrowers because I am not an attorney. However, I have long been a home loan specialist, because I am both a real estate broker and a mortgage broker (here the term mortgage is misused once again by me).
What we call a lender (among worse names) claimed to the borrower that they were going to loan him or her money to buy your home, but the lender can't rely on everyone just knowing that you borrowed money. There must be evidence that you borrowed money and that you know who loaned it to you.
So, if I loaned you $ 200,000 (dreamer) and you gave it to the house seller, the money is gone. What is left when the money is given to the home seller? All that is left after the money was paid from you, the borrower, to the Seller of the house is the debt to the lender, which is the "debt" that you must pay back.
You signed the Promissory Note and gave it to the lender providing them with the physical evidence that you have borrowed the money from them and that you have promised to pay it back according to the terms that you and your lender agreed to. (This includes interest rate, amount of time until it is all paid back, how often you pay, and how much you pay each time you pay).
So, the Promissory Note is evidence of the debt. (But, not actually the debt.) A Promissory Note should be required by law to be recorded, but as we will talk about later there is a recording that indicates that there was at one time a Promissory Note.
Now, since you have promised to pay back money that was given to you and that there is written physical evidence of the money you received, then we can say that the Promissory Note is essential to the deal you have made. For many hundreds of years everyone new that the Promissory Note (many professionals and other stooges like to say "Note", but I have learned to say it exactly as it is meant to be said).
Anyway, for hundreds of years literally everyone has always known that the Promissory Note is the only indispensable piece of a home loan.
But, the lender paid for the house for you and that house is really the best collateral for him to tie to the loan he made. There is no law defining what you and the lender can agree to as what you will pledge to the lender in case you can't pay back the money you borrowed, but the home you are purchasing with that borrowed money makes logical sense.
In today's world (after 1994) you probably could not have talked a lender into any other collateral, so you probably signed a Security Instrument describing the property and what happens when you have paid back all the money, or what happens if you are unable to pay back the money according to the terms of the Promissory Note.
The security instrument is then, kind of the rule book on what will happen if everything goes well and what will happen if things don't go well. More simply, the Security Instrument is the rule book for the loan. It describes the Promissory Note and it is the guide that you will use if A. You pay off the Promissory Note you signed to get the money to buy your home and B. You don't pay off the Promissory Note.
A better description might be is that you don't really pay off your home as we tend to think of it. In reality you buy back the Promissory Note that you signed and issued in order to get the use of the money. When you finish buying back your Promissory Note you used to always get the Promissory Note back marked PAID. But, the banking world influenced the legislative bodies around the country to allow short cuts to this which further confused the judges.
The Promissory Note is no longer evidence any debt, because when you paid back all the money you agreed to, you no longer owe a debt. People used to have parties and burn the Promissory Note when it was returned to them marked paid and this purchase back of a Promissory Note can be defined by the term "free and clear". This term means free of any liens.