Pro Se Primer 101 – 1 – Home Loan Terms and Documents: Promissory Note, Mortgage, or Deed of Trust
“Damn my eyes… The people I’ve seen… Crawling through the wreck of the american dream”
Perhaps the biggest help to the illegal parts of foreclosure is the word “mortgage.”
In all 50 states, this word is universally misused as a synonym for “home loan.” Home loans are known as mortgages as a jargon term.
But, a mortgage is not a home loan at all. It is simply the name of an incidental, but not essential, instrument used to define collateral that a borrower of any type of loan has agreed to pledge as collateral for a loan repayment. The lender and the borrower have agreed that the collateral promised by the borrower will be forfeited in the event of default. The term mortgage evolved from the fact that the mortgage loan included the property as collateral. The mortgage described the guarantee. 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 nonjudicial foreclosure states, it’s known as a “deed of trust.” In all 50 states, it is the Promissory Note that binds the borrower to their 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 the money that has been borrowed and used for the purpose that both the lending party and the borrowing party have agreed to. This security instrument (remember it may be called a mortgage or deed of trust) is used only if the borrower finishes repurchasing their Note (ie, paid off the home loan), or becomes unable to repay it.
This is important to remember because court judges do not know how real estate deals work and are being misled over and over again by their perception of the situation and not the law. You must make the judge understand that the Note is not the highest priority. Debt, or money, is the real thing. It was the money that paid for the house. The Promissory Note is the physical evidence that a loan of money was made. But, each executing party must prove how they legally came into possession of it. Possession of the Note is no more proof of ownership of the loan than possession of a car is proof of ownership of that car. Proof of ownership must come from contracts, transfers, cashier’s checks, etc. involved in the deal. The constitution says that without “concrete and particularized” evidence to support claims of right of execution, there is no right of execution.
You do not owe a Promissory Note to the Holder at the Maturity of your loan, you owe the return of the money you received as a loan. The promissory note is important because it is all that exists to evidence the debt in case the borrower pays it in full or does not finish paying it. We focused on directing that message to the judges. The executing party as a debt collector will focus on the words of your claim and only the words and not the money it represents.
If you did not receive the money from the name lender on your Note and Security Instrument, then there is no way for either party to claim that they legally purchased the Note. The fraud is that they only say they have the Promissory Note and don’t even try to prove how they got it. Without proving this statement with “concrete and particularized” evidence, then the Promissory Note that they claim to have is null. A debt collector cannot collect money from someone who does not owe you money.
The debt collector must show that it has a right to collect (foreclosure is a “debt collection” act), so it must also show beyond a shadow of a doubt that you paid money for your Note before it can require you to return the money. No borrower can be forced to pay someone he does not owe. I am convinced that 100% of mortgage loans made after 1999 or possibly even earlier named a lender who did not give the borrower any of the promised money. Yes, the borrower absolutely got the money, but from whom? He must pay only the real part in interest.
The collector must prove that it was him or them. Once a borrower has spent the borrowed money for its intended purpose, there must be evidence of the loan and repayment terms. The promissory note is that evidence and is the essential proof that a loan has been made and is due. Whether the borrower and the lending party have agreed that something substantial is needed to ensure that the lending party can recover the money lent to them, even if the borrower is unable to pay it back. The borrower can pledge something of his property as collateral, commonly called collateral.
Some synonyms of the word collateral are: surety, guarantee, guarantee, insurance, indemnity, endorsement, indemnity; as in “she put her house up as collateral for the loan”
There is a great deal of confusion caused by the use of the word mortgage to refer to a mortgage loan. Part of this is an innocent evolution of the terms Promissory Note and Mortgage, which in the past were part of a document or instrument.
But today criminal executing parties (I don’t use the word lender here, because very, very rarely is the executing party the actual lender or even the legal owner of the Essential Note) are using mortgage assignments (or deed of trust to supposedly transfer ownership of their loan, but in reality they are taking advantage of the common misuse of the word “mortgage” as slang for “mortgage loan”.
This is an intentional act of deception and misrepresentation, since there is no assignment of the mortgage. Only the assignment of the Note can transfer ownership of a loan. But, it is done simply by endorsing the Promissory Note itself, just like you endorse a check to deposit it into your bank account at your bank, or to take cash.
The mortgage, like the description and collateral agreement, always follows the Note as it is essential to a loan. The Note never follows the assignment of the “incidental” mortgage.
The Supreme Court of the United States outlined this in the case of “Longan vs. Carpenter” in 1872, and since all Supreme Court rulings and orders of the Supreme Court of the United States are binding as law in all courts of the nation. All courts are arms of the Supreme Court of the United States.
I learned a lot of what I know from 2012 by reading authors who seemed to be trying to help borrowers who were locked into fraudulent foreclosures. Today I know that these authors help at the same time. They were not clear on these issues and the real intention was to find a way to make money off uninformed borrowers. I had an advantage over most borrowers because I’m not a lawyer. However, I have long been a specialist in mortgage loans, because I am both a real estate broker and a mortgage broker (here the term mortgage is once again misused by me).
What we call a lender (among worse names) told the borrower that they were going to lend you money to buy your house, but the lender can’t trust everyone to know that you borrowed money. There must be evidence that you borrowed money and that you know who lent it to you.
So if I loaned you $200,000 (dreamy) and you gave it to the seller of the house, the money is gone. What is left when the money is delivered to the seller of the house? All that is left after you, the borrower, have paid the money to the home seller is the debt owed to the lender, which is the “debt” you must pay.
You signed the Note and delivered it to the lender providing physical evidence that you borrowed the money from them and that you promised to repay it according to the terms that you and your lender agreed to. (This includes the interest rate, the amount of time until everything is paid off, how often you pay, and how much you pay each time you pay.)
So, the Note is evidence of the debt. (But not really the debt). The law should require that a Promissory Note be recorded, but as we will see later, there is a recording that indicates that there was once a Promissory Note.
Now, since you promised to return the money given to you and 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 knew the Promissory Note (many professionals and other stooges like to say “I’ll Promissory”, but I’ve learned to say it exactly as it should be said).
Regardless, for literally hundreds of years, everyone has known that the Promissory Note is the one indispensable piece of a mortgage 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 that defines what you and the lender can agree on as what you will promise the lender in case he can’t pay back the money he borrowed, but the house he is buying with that borrowed money makes logical sense.
In today’s (post-1994) world, you probably couldn’t have convinced a lender of any other collateral, so you probably signed an Instrument of Collateral that describes the property and what happens when you’ve paid all the money back, or what happens if you cannot repay the money according to the terms of the Note.
The security instrument is thus a kind of rule book about what will happen if all goes well and what will happen if things do not go well. More simply, the Security Instrument is the rule book for the loan. It describes the Note and is the guide you will use if A. You pay the Note you signed to get the money to buy your home and B. You don’t pay the Note.
A better description might be that you don’t really pay for your house like we usually think. In effect, you buy back the Note you signed and issued to get the use of the money. When you finish repurchasing your Promissory Note, you used to get back the Promissory Note marked as PAID. But, the banking world influenced legislative bodies across the country to allow shortcuts to this, further confusing the judges.
The promissory note is no longer evidence of any debt, because when you paid all the money you agreed to, you no longer owe a debt. People used to throw parties and burn the Note when it was returned to them marked as paid and this later purchase of a Note can be defined by the term “free and clear”. This term means free from any link.