Are you interested in investing on promissory notes? We are constantly in the market to buy and sell notes.

What is a Mortgage or Promissory Note?

A mortgage or promissory note is a lien instrument that generally involves two parties:

Mortgagor -- person giving the mortgage, or borrower
Mortgagee -- person to whom the mortgage is given, or lender

The Mortgage, in short, is a document which gives the mortgage note holder (mortgagee) a claim upon the property covered by the mortgage. Mortgages must be recorded (filed for public record in a place that is designated by state law where real estate is located), to be effective. This is generally the County Clerk, or Country Recorder of the county where the property is located. When such documents are filed, they are logged into permanent records of the recorder's office and become public record.

The mortgage document describes the real estate which is being pledged as collateral for the mortgage note, or promissory note. The mortgage describes all the conditions under which the mortgage is given and also describes the rights and obligations of the two parties.

As lender or mortgage holder, you actually own a tangible asset which can be bought or sold. The purchase of a mortgage note is not much different than the purchase of an automobile. The seller gets cash, signs the appropriate transfer documents to the buyer and hands over the original documents, the note and the mortgage. The new owner has the mortgage in hand and will enjoy all the benefits of ownership in this case, including the monthly payments and earned interest. Once the mortgage note is sold, the payments go directly to the new buyer.

 

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