Storing the Original Mortgage Note
It may seem like a simple matter, but safekeeping a Mortgage Note in a safe place is, sometimes, easier said than done. A Mortgage Note, or Promissory Note, is an agreement where you agree to finance all or a part of a buyer’s purchase of a property you own. The interest earned on the mortgage note can be better than what banks offer or the stock market is providing. That makes self-financed mortgages a valuable investment tool for many people. Due to the value and importance of the documents evidencing the agreement terms and conditions, it is critical to retain all the documents safely and securely.
Possession is 9/10ths of the Law
The old saying that “Possession is 9/10ths of the law” is important to keep in mind when securing original copies of a signed mortgage note. He who owns the paper holds the monetary value of the agreement in their possession. A Mortgage or Promissory Note is considered a negotiable instrument in many states. A negotiable instrument is a document that can transfer ownership of an asset from one owner to another. Like writing a check sends money from your account to the recipient’s bank account, a signed-off negotiable instrument is a marketable asset that transfers title and ownership.
Why Is It So Important?
In most cases, upon the sale of real estate, the Title of Ownership and Deed of Trust are changed to reflect the buyer’s name. The collateral securing the Mortgage Note is the real estate that has been sold, so the Mortgage Noteholder (seller) no longer owns the asset financed. The importance of and risks involved with financing a mortgage note require the agreements to be written by competent legal counsel familiar with real estate transactions of this nature. Protections built into the mortgage note which benefit the property seller are important stipulations and have to be retained in their original form in case there are any future problems or default on the mortgage.
Safekeeping the Mortgage Note and More
The documents involved in a Mortgage Note are important because they reflect an agreement between two parties that involves property and money. Files should contain certified copies of the Title, Deed of Trust, and financing agreement as well as other papers that contain information regarding payment of property taxes, property insurance, and other expenses by each party. In addition, any addendum or amendments to the original Mortgage, Deed of Trust or Land Contract must be filed with the proper authorities and copies of the filings should be retained as well.
Where to Protect the Mortgage Note
The obvious place to safeguard an important set of documents like a Mortgage Note is in a safe or bank safety deposit box. Many attorneys, loan servicers and title or escrow companies provide safe storage options for their client’s important paperwork as well. Original documents should also be scanned into a computer and saved on multiple memory storage devices, in case something goes wrong with the computer hardware in the future. Holding certified copies of the original documents retained in multiple locations is the best insurance against disaster and disputes.