Written by: Oliver Max Gardner III–
The term “Mortgage Note” or “Note” refers to the promise to pay signed by the homeowner or obligor.
The term “Mortgage” refers to the real estate security instrument (mortgage or deed of trust) that must be filed with the local land registry to perfect the rights of the holder of the note and that is subject to the Statute of Frauds.
Note that Standard Fannie and Freddie Uniform Instruments cross-reference the note and the mortgage and provide that a breach of covenants in either document provides right to accelerate balance due and declare a default.
State law determines how mortgages travel—always travel by assignment due to statute of frauds. An assignment is a conveyance of a security interest in real property.
State law governs the necessity to record assignments. Some state laws have been amended to accommodate MERS, but not that many.
Failure to record an assignment is a matter of priority and perfection if a bankruptcy is filed…
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