Promissory Note - Legal Requirements by MarcusM » Tue Jul 21, 2009 5:36 pm

Here is a good summary and explanation of the promissory note and its significance in law. Most of these principles are likely to apply to all countries - this article is US based
using some US specific details and case law. The site is: http://void-judgments.com/prove_existence_note.htm

The Lender/Debt Collector Must Prove the Existence of the Note

To recover on a promissory note, the plaintiff (the Lender in the case of foreclosure and debt collection) must prove:(1) the existence of the note in
question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note in due course; and (4) that a certain balance
is due and owing on the note.

Trial court erred when it did not proceed to take testimony before it entered default judgment (see definition below) for the plaintiff; the unsworn
statement of plaintiff's (plaintiff is the lender) attorney could not support default judgment rendered.

It is also true, in mortgage foreclosures, prove up of the claim requires presentment of the "original" promissory note and general account and
ledger statement. Claim of damages, to be admissible as evidence, must incorporate records such as a general ledger and accounting of an alleged
unpaid promissory note, the person responsible for preparing and maintaining the account general ledger must provide a complete accounting which
must be sworn to and dated by the person who maintained the ledger.

To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that
the plaintiff is the owner or holder of the note in due course; and (4) that a certain balance is due and owing on the note.

1) the existence of the note in question

2) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then your defense
is as follows:

3) the "named" Plaintiff is not the 'holder in due course" of the note and only an agent or nominee for the true beneficial owners and holders in due
course;

4) there may be fraud upon the court in that the named Plaintiff may not have ANY interest to the note and that the supposedly lost note is not lost,
but may have been intentionally destroyed due to missing assignments on the note which may have made it void and a legal nullity, thus they have
exploited key and vital evidence;

5) there is no proof that the named Plaintiff ever held the note or took possession of the note and thus has no claim or right to bringing about the
foreclosure;

6) there is no proof, without the note, that a proper chain of assignments took place and that the lien positions were properly perfected;

7) other unnamed and disclosed real parties in interest may have a claim to the note and be the rightful beneficial owners to the note and must be
identified and brought before the court;

8. there may be several unnamed and disclosed real parties in interest may have a claim to the note and be the rightful beneficial owners of the note;

9) that the party sued signed the note

10) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then you need to
notify me and also put on affirmative defenses that:

11) the note in question is not the note you signed and executed in ink and only the one you signed in ink that presumably contains your fingerprints
can be relied upon by your handwriting analysis expert;

12) in an electronic age, it is a simple matter to place someone's signature or image upon a document and that it is very difficult to imagine such a
valuable negotiable instrument being lost or missing without a nefarious motive.

13) that the plaintiff is the owner or holder of the note in due course;

14) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then you need
put on affirmative defenses that: a) the mortgage industry, investors, and GSE's such as Fannie Mae, Freddie Mac, and FHLBs etc. have a
requirement that the last endorsement to them be undated and "blank" leaving the payee line blank and making the negotiable instrument a sort of
"bearer bond" and instrument. as such, any party finding or stealing the note can place their name on the payee line, claim ownership of the note,
and sell the note to others who may make a demand upon you in the future. as such, you require money to be deposited in an escrow account or
with the court in an amount equal to the amount claimed owed on the note, until such missing note is found or upon your death. notes have a life of
their own...

b) if the note was destroyed or lost intentionally (the industry maintains this practice) then they may be trying to hide the beneficial owners and
shield them from any assignee liability arising from the actions of the servicer who they hire, supervise and most importantly authorize to foreclose
upon you. without the note, since subsequent endorsements are not recorded to avoid payment of taxes and t hide true and real beneficial interests,
there is no possible way to determine who ever held a rightful interest in the note and who you may have claims or counter claims against and who
should be presently before the court as a real party in interest.

c) Furthermore, if there are missing assignments of the original note and the assignment went from Lender A to Lender B to Lender D without an
intervening assignment from Lender B to Lender C and From Lender C to Lender D, then the note may be void and a legal nullity in your state.

d) It is industry practice to not name the GSE, investor, or real party in interest in foreclosure and to use as a front for the Plaintiff:

i) The very original lender who may or may not even be in business any more or sold their interest in the note long ago, only to have a claim made
upon them for repurchase;

ii) A Servicer of even "special servicer" who is acting as an agent for the investors, GSE's or real party in interest, but has no beneficial ownership
in the note since they are only being paid to collect and foreclosure by the real parties in interest

iii) A "nominee" such as MERS who has no legal authority to foreclose upon you and do business in your state and who according to their own
written documents and verbal assurances never hold the note or own "any" beneficial interest in the note!!!!!

e) Notes are pledged, sold, bifurcated, and traded in various derivative transactions like bubblegum baseball cards and their transfers, sales, pledges
etc. Are not publicly recorded. As such, only possession of the actual original note can prove the actual owner and holder in due course of the note
and who you can make an offer of payment to for purchase of the note by yourself, another family member or partner. You have a right to know the
rightful owner of the note so an offer for payment of the note at a discount and at fair market value can be made. If the note has been pledged and
encumbered, then that party must be made aware of the foreclosure and your right to negotiate with them a payment and release of the note by you,
other lien holders or private parties;

f) Notes are traded often and you need to inspect the physical note to see who the real prior parties were that held and endorsed your note since you
may have counter and cross claims against them and need to bring them before the court for the action, since they may have improperly inflated
your principal balance, amount owed or escrow account by not applying your payments correctly; adding fees not legally owed by you to the
principal balance; miscalculating the interest and not properly amortizing your loan; fraudulent selling your loan or misreporting you on your credit
report.

g) Federal Circuit Courts have ruled that the only way to prove the perfection of any security [including promissory note] is by actual possession of
the security. Current or prior possession must be proved up.

(h) that a certain balance is due and owing on the note.

15) You must have the master transaction histories and general ledgers for the account since a "dump," "summary," or redacted record cannot be
relied upon to determine the rightful amounts owed by having a complete audit of your account. In order to conduct a proper audit, master records
and all prior records must be compiled, reviewed, analyzed, and reconciled. In is not you responsibility to prove each payment was made. It is your
responsibility to say a payment was made and provide evidence, including your word that it was made. It is the note holder's duty and responsibility
to validate the claims being made on the note and the amount owed. If they have the master records or claim that the records of prior servicers are
missing, then there is no rightful way for anyone to prove up the balances and amounts they claim are owed!!!! Furthermore, you must claim:

a) That the principal balance claimed owed, is not owed, and is the wrong amount.

b) That the loan has not been properly credited and amortized;

c) That the current servicer cannot be relied upon to testify and certify that prior amounts, transactions, credits, debits, charges and fees added by
prior servicers were indeed proper and correct and that the account they were transferred was properly amortized and credited. As such, the person
holding the ledgers at the prior servicer must come and testify as to the amounts owed on the note.

d) dumps and summaries of amounts owed cannot be relied upon and only original ledgers and master records and the keeper of those records cant
testify as to the amounts claimed owed and due.

Supporting Case Law

Where the complaining party cannot prove the existence of the note, then there is no note.

See Pacific Concrete F.C.U. V. Kauanoe, 62 Haw. 334, 614 P.2d 936 (1980), GE Capital Hawaii, Inc. v. Yonenaka 25 P.3d 807, 96 Hawaii 32,
(Hawaii App 2001).

Siwooganock Bank in Lancaster NH, in alleged foreclosure suit, failed or refused to produce the actual note which Siwooganock alleges Eva J.
Lovejoy owed.

To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that
the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note. See In Re: SMS Financial LLC. v. Abco
Homes, Inc. No.98-50117 February 18, 1999 (5th Circuit Court of Appeals.)

Volume 29 of the New Jersey Practice Series, Chapter 10 Section 123, page 566, emphatically states, “...; and no part payments should be made on
the bond or note unless the person to whom payment is made is able to produce the bond or note and the part payments are endorsed thereon. It
would seem that the mortgagor would normally have a Common law right to demand production or surrender of the bond or note and mortgage, as
the case may be. See Restatement, Contracts S 170(3), (4) (1932); C.J.S. Mortgages S 469, in Carnegie Bank v, Shalleck 256 N.J. Super 23 (App.
Div 1992), the Appellate Division held, “When the underlying mortgage is evidenced by an instrument meeting the criteria for negotiability set
forth in N.J.S. 12A:3-104, the holder of the instrument shall be afforded all the rights and protections provided a holder in due course pursuant to
N.J.S. 12A:3-302"

Since no one is able to produce the “instrument” there is no competent evidence before the Court that any party is the holder of the alleged note or
the true holder in due course. New Jersey common law dictates that the plaintiff prove the existence of the alleged note in question, prove that the
party sued signed the alleged note, prove that the plaintiff is the owner and holder of the alleged note, and prove that certain balance is due and
owing on any alleged note. Federal Circuit Courts have ruled that the only way to prove the perfection of any security is by actual possession of the
security.

Supporting Case Law

Unequivocally the Court’s rule is that in order to prove the “instrument”, possession is mandatory.

See Matter of Staff Mortg. & Inv. Corp., 550 F.2d 1228 (9th Cir 1977). “Under the Uniform Commercial Code, the only notice sufficient to inform all
interested parties that a security interest in instruments has been perfected is actual possession by the secured party, his agent or bailee.” Bankruptcy Courts
have followed the Uniform Commercial Code. In Re Investors & Lenders, Ltd. 165 B.R. 389 (Bankruptcy.D.N.J.1994), “Under the New Jersey Uniform
Commercial Code (NJUCC), promissory note is “instrument,” security interest in which must be perfected by possession.