Mortgage Note (Promissory Note)
The legally binding promise to repay a mortgage loan, specifying the loan amount, interest rate, payment schedule, and default consequences.
The mortgage note is the primary obligation document in a real estate loan transaction. It defines the borrower's debt — the principal amount, the interest rate (fixed or the index plus margin for adjustable loans), the payment schedule, and what happens if the borrower defaults. The note is a negotiable instrument that can be sold; when a loan is sold to a servicer or into a mortgage-backed security, the note is endorsed and transferred to the new holder.
The note works in tandem with the deed of trust or mortgage: the note creates the obligation to repay; the deed of trust or mortgage creates the lender's security interest in the property. If the borrower defaults on the note, the lender exercises its rights under the deed of trust to foreclose. Document intelligence applied to mortgage notes can extract the interest rate structure, ARM caps, prepayment penalty calculation, and default provisions — information that borrowers and investors need to understand their obligations.
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A contractual obligation where one party agrees to compensate the other for specified losses or damages.
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