Who OWNS the Promissory Note?

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Re: Who OWNS the Promissory Note?

Postby bustthematrix » Fri Dec 11, 2009 12:03 pm

Wow folks, these are all great inputs to this discussion. I've been away and just got back...

HS - that would seem to be a VERY interesting line of reasoning...I'm still not sure the creator of a promise exclusively owns that promise though? Is s/he not making that promise to specific someone? Especially as the promise itself is drafted by that someone else (the lender) and the promisor then signs it. Thus affirming consent to make the oath or promise which is what gives it life (value or force).

At the same time, the lender is extending funds in exchange for this promise to pay back.

This promise is the only real security the lender has. Of course, where the promisor has physical assets e.g. property or a car, the lender can lien the asset as well but let's talk unsecured for now.

So then, as the lender holds the note in pledge (or in exchange) for payback at fixed dates and times, does that not make them the owner and holder of the note?

GS - I hear your well reasoned points, yes it's the value of the promise (and hence the note that witnesses it) that's most important. However, for the purpose of this thread, I'm trying to get to the heart of the ownership of these promissory notes and the rights of the owner of a note versus those of the holder of a PN.

This is what governs what lenders can rightfully do with these notes or not, with OR without consent of the promisor as the case may be.

BBD - thanks for the input.
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Re: Who OWNS the Promissory Note?

Postby gepisar » Fri Dec 11, 2009 12:13 pm

Maybe we can look at a parallel case and ask "Who owns a bearer bond?"
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Re: Who OWNS the Promissory Note?

Postby bustthematrix » Sat Dec 12, 2009 7:41 pm

Gepisar...interesting...

I believe it's the bearer because he has 'bought it'. The seller/issuer of the bond (a form of PN) has been paid and the PN is exchanged for that value + future interest.
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Re: Who OWNS the Promissory Note?

Postby gepisar » Sat Dec 12, 2009 7:52 pm

Here's from wikipedia, but remember, we are after a precise definition of "ownership" as opposed to "holder" or rights of title.

A bearer bond is a debt security issued by a business entity, such as a corporation, or by a government. It differs from the more common types of investment securities in that it is unregistered – no records are kept of the owner, or the transactions involving ownership. Whoever physically holds the paper on which the bond is issued owns the instrument.

And from investopedia.com:

What Does Bearer Bond Mean?
A fixed-income instrument that is owned by whoever is holding it, rather than having a registered owner.

Coupons representing interest payments are likely to be physically attached to the security and it is the bondholder's responsibility to submit the coupons for payment. As with registered bonds, bearer bonds are negotiable instruments with a stated maturity date and coupon interest rate.

Investopedia explains Bearer Bond
Bearer bonds are getting harder and harder to find these days, especially within developed economies. While they are fairly common in many parts of the world (mainly places where anonymity is an issue), the fact that little protection or recourse exists for holders against issues such as theft has taken away their applicability in recent decades. Furthermore, most bond instruments aren't even physically issued anymore, but exist only in the computerized records of brokers and custodians.

So, my "money" is on the holder - i.e. possession 9/10ths, i.e. the holder is the owner.
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Re: Who OWNS the Promissory Note?

Postby rodgreenwell » Sun Dec 13, 2009 3:53 pm

Picked this up from somewhere and not sure of its authenticity and generally relates to a mortgage but...

The two points here are that during the loan period the lender retains (not owns but if posession in 9/10ths then...) and once the loan is paid in full the borrower has the promissory note returned!!! Uhmmm.... have never had a promissory note returned...

What is a Promissory Note?
Whereas the deed of trust is security of the debt, secured by the property, the promissory note is secured by the deed of trust and is the evidence of the debt.

•The promissory note is a promise to pay, signed by the borrower in favor of the lender.

•It contains the terms of the loan such as the interest rate and payment obligations.

•The promissory note is generally not recorded.


•When the loan is paid, the promissory note is marked "paid in full" and returned to the borrower, along with a recorded Reconveyance Deed.

•During the term of the loan, the lender retains the promissory note.


Before Signing a Promissory Note and Deed of Trust
Read both documents, including the pre-printed portions. You might ask the closer to send you a blank deed of trust and promissory note beforehand. Because preparers are human and can make mistakes, here are the important items to review:

•Spelling of trustors' names

•Principal balance of the loan

•Interest rate (and the rider, if adjustable)

•Payment amount

•Prepayment penalties, if any

•Address of property
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Re: Who OWNS the Promissory Note?

Postby gepisar » Sun Dec 13, 2009 5:03 pm

The two points here are that during the loan period the lender retains (not owns but if posession in 9/10ths then...) and once the loan is paid in full the borrower has the promissory note returned!!!


This just underlines the fraud to me, the fact that in most case the note isnt returned just makes it worse!
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Re: Who OWNS the Promissory Note?

Postby rodgreenwell » Sun Dec 13, 2009 5:46 pm

Agreed gepisar, kind of underlines the problem when you dont know what you dont know.... until you do!!!!
What happens to the note once the debt has been cleared? Are they even still in existence? :puzz:
Does this mean we should all request the return of the PN on all those debts/loans we have had and have fulfillied the obligation on...?
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Re: Who OWNS the Promissory Note?

Postby gepisar » Sun Dec 13, 2009 7:09 pm

This is the whole fraud.
What this says to me is, "we give you money, you give us note, when you give money back, we give note back."

That seems reasonable, only they want money+interest, which isnt, because the note and money are things of similar value.

simply put:

(MONEY(banks) + NOTE(mine) ) - ( MONEY(mine)+ NOTE(mine)) =0

which suggest to me that

MONEY = NOTE and the banks bloody know it.

Thinking about it further, we sign a PN to repay Principal + Interest, but EVEN if the bank used its own money (which they dont) to lend to you, they would only lend you Principal. So our PN has more value, thus not equal consideration.
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Re: Who OWNS the Promissory Note?

Postby rodgreenwell » Sun Dec 13, 2009 7:39 pm

Another great point Gepisar... Equal consideration :thinks:

The answer to BTM's original question of "who actually owns the promissory note is still unanswered but has anyone "actually seen" a PN as authored by me/you and concieved in deceit by the bank? Are there terms and conditions associated with it? maybe the answer to this question could be found by each of us who has a satisfied loan requesting the original promissory note back, especially if we make the "assumption" that once the debt has been paid in full then the PN is technically satisfied and If our signature created the promise to pay then it would seem logical that once paid the note should come back to the author of the note.

Might be worth a notice or two asking for the origial and unaltered PN to be returned to its rightful owner :thinks:

What do you think :puzz:
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Re: Who OWNS the Promissory Note?

Postby gepisar » Sun Dec 13, 2009 9:01 pm

I dont think it works this way.

Under bankruptcy, we can never satisfy a loan. This is why it's never paid. In fact, its against public policy to PAY debts. (with real substance)
We use money, just another promissory note, to make fiat currency payments (not equal to payment).

Again this is the fraud. You make a loan when you exchange promissory notes. Thats is. You're done.

Ive even heard, though again unsubstantiated, that all these PromNotes are kept at the bank and because we dont ask for them back, the bank claims them as abandoned funds and doubles their money (well, almost)

I heard this from a certain wealth club seminar i went to, but alas didnt join...
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