Question 1

What is a mortgage note?

Accepted Answer

A mortgage note (also called a promissory note) is the document that contains the borrower’s promise to repay the loan. The note specifies: the principal amount (the amount borrowed), the interest rate (fixed or adjustable), the payment schedule (monthly payments of principal and interest), the maturity date (when the loan must be paid in full), late payment provisions (grace period and late fee amount), prepayment provisions (whether the borrower can pay the loan early without penalty), and default provisions (what constitutes a default and the lender’s remedies). In Florida, the mortgage note is separate from the mortgage: the note is the evidence of the debt (the borrower’s promise to pay), and the mortgage is the security for the debt (the lien on the property). Both are needed to foreclose.

Question 2

Why is the original mortgage note important in Florida?

Accepted Answer

Original note importance: in Florida foreclosure proceedings, the plaintiff must prove they hold the original note (or have the right to enforce it). Under Florida law: the holder of the original note is presumed to be the owner of the debt and has standing to foreclose, if the original note has been lost or destroyed, the plaintiff must file a "lost note" count in the foreclosure complaint and prove: the terms of the note, that the note was not voluntarily transferred, and that the plaintiff is the person entitled to enforce the note. The original note requirement has been a significant defense in Florida foreclosure litigation: many foreclosure cases have been dismissed because the plaintiff could not produce the original note or prove standing.

Question 3

What happens to a mortgage note when a loan is sold?

Accepted Answer

Loan sale: when a loan is sold on the secondary market: the note is endorsed (signed over) from the seller to the buyer (similar to endorsing a check), the endorsement may be in blank (payable to whoever holds the note) or specifically to the buyer, the mortgage is assigned (through a recorded assignment of mortgage), and the borrower is notified of the new servicer (the party to whom payments should be made). The note and the mortgage should travel together: if the note and mortgage are separated (the note is held by one party and the mortgage by another), enforcement issues can arise. Florida courts have held that the holder of the note is the party with the right to foreclose (the mortgage follows the note).

Mortgage Note

Mortgage Notes in Florida

Note Contents

Original Note Requirement

Loan Sales

Related Terms

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