Posted by Michael Morrongiello on June 30, 2003 at 15:15:23:
We have purchased numerous deals where the ORIGINAL promissory Note instrument was lost or misplaced. As you may or may not be aware the ORIGINAL Note is THE “negotiable instrument” we are purchasing when we purchase a Note. A photocopy of the Note is NOT a negotiable instrument and cannot be readily tendered or endorsed just like a bank will not provide you with cash for an endorsed copy of a personal check.
Depending on what state the property is located in will dictate a course of action when dealing with a lost Note instrument.
Sometimes a copy of the signed or unsigned Note is recorded along with the Mortgage or Trust Deed instruments. This can be used to create an affidavit with certain recitals, indeminification language, etc. that the Note seller and /or Note payors would execute “Nunc Pro Tunc” (a fancy latin phrase meaning Now as if it were then…)effectively resurrecting the debt…
The real danger is if you have to foreclose and the court asks you to produce “evidence of the debt” which is what the prommissory Note represents. With a lost Note there may be certain holes that can be exploited by an aggreesive Payor who is wanting to delay or derail your ability to collect on the debt.
Some states require a bond be posted for the lost note in the event it were to ever turn up in the future.
As for the lost Deed of Trust - as long as a clerk obtain CERTIFIED COPY Of this recorded instrument can be obtained you are OK with this.
Its the Lost Negotiable instrument (the Note) that will present you with the most problems.
If you feel uncomfortable you can always “broker” the Note and make a little bit of money for your effort and time (Sunvest would have interest in such a transaction).
To your success,