Why You Need To Understand The Difference Between A Note and Mortgage
By: Lance T. Denha, Esq.
In simple terms, the mortgage itself doesn’t prove you owe money or have a debt. It’s not even solid evidence of the note—the document that shows you have an obligation to pay.
The mortgage only shows there’s an agreement to use your property as collateral, promising to make payments for an underlying obligation. Without that obligation, there’s no valid lien, even if the mortgage is signed and recorded. Some courts make a mistake by treating the mortgage as if it were the note, but it’s not.
For a legal duty to exist, there must be both someone required to do something and someone entitled to benefit from that duty. Our legal system strictly follows this rule.
People, including homeowners and their lawyers, get confused because they know they promised to pay, which could be legally binding if there was someone expecting payment. But if that someone disappears, the duty to pay disappears too. This often leads people down the wrong path, assuming that if they promised to pay, there must be someone they owe. In the world of banking, that’s not always true.
IMPORTANT TIP: IF YOU DON’T OWE MONEY TO THE NAMED PARTY, THERE’S NO VALID LIEN IN THEIR FAVOR. THIS IS ALWAYS TRUE.
In simpler terms, the idea that someone can foreclose on your mortgage without proving you owe them money is incorrect. No court accepts that idea. The challenge for homeowners is that courts assume you owe money to the named party, which might not be true.
The note which outlines your payment obligation, can be used in court. Having the original note makes it seem like the holder owns the underlying obligation. The main question is whether you actually owe money to the party claiming you should pay.
Many people start defending themselves by saying, “Yes, but…” A more successful defense starts by asking, “What obligation?” It’s not about denying you promised to make payments; it’s about challenging anyone’s right to make you pay. Success comes when it’s proven that the party claiming payment isn’t owed anything.
In simpler terms, it’s clear the claiming party isn’t owed money when either:
- They admit they have no records showing you owe money, and they never got any payments from you.
- They can’t or won’t answer questions or provide documents in legal proceedings.
In summary, while a mortgage alone doesn’t prove a debt, understanding that the obligation lies in the note and challenging anyone’s right to claim payment is key. Remember, success in defending against foreclosure often hinges on proving that the party seeking payment isn’t actually owed anything, a point that can be revealed through their records or their reluctance to provide essential information in legal proceedings.
