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In order for a foreclosure proceeding to occur, there must have been an original mortgage document and promissory note signed in favor of a bank. This typically occurs when the property is originally purchased, however, this could also materialize pursuant to an obtaining an equity line of credit with the home serving as the collateral for the additional mortgage. The mortgage document and the promissory note work together to provide the rules for the homeowner to follow and the right for the lender to protect their interest in the collateral (the home).

A promissory note is almost always signed along with a mortgage. The mortgage states the terms of the loan arrangement and attaches the property as the collateral for the loan, whereas, the promissory note is the actual “promise” to repay the debt. Lenders generally include both documents in their foreclosure complaints as exhibits because the mortgage document and the promissory note work together to require a homeowner to re-pay the bank in the event of a breach of contract or failure to pay monthly payments due to hardship.

The promissory note is usually a one (1) to three (3) page document, at most, which is essentially an “I Owe You” to the bank. Promissory notes rarely have extensive contractual provisions and/or stipulated consequences of default. Rather, promissory notes refer back to the mortgage document for the terms of the loan. Mortgage documents can be as long as thirty (30) pages long detailing such terms. The other major difference is that the mortgage is the document that secures the home as the collateral for the loan. In other words, the mortgage allows the bank to foreclosure on the home if payment is not received. Without the mortgage, the promissory note would be harder to enforce (it would not have any collateral for the promise to repay). Therefore, both documents should be reviewed and strictly adhered to. If a breach of contract due to financial hardship is imminent or has recently occurred, contacting a knowledgeable foreclosure attorney and providing them with a copy of mortgage and promissory note is crucial to ensure that you have the best chance to keep your home.

Contact the attorneys of The Ticktin Law Group to assist you with foreclosure defense action and/or any other legal matter you, a friend or a loved one may have. The attorneys of The Ticktin Law Group offer complimentary legal consultations.


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