A promissory note is a legal document that binds the borrower to repay a debt by a certain date or on a schedule of installments. A mortgage promissory note is usually not enough to ensure that a lender can recover the collateral, so it is secured by a mortgage or a deed of trust, which protects the lender in the event of a default. The state in which the property is located determines what type of security documentation is required.

With a deed of trust, a third party takes possession of the title to the property and holds it until the principal of the loan is paid back in full. If the borrower defaults, this third party trustee is responsible for selling the property at its fair market value, giving the mortgagee whatever proceeds they are still owed from the loan.

When a mortgage is used as security there is no third party, so the lender must file a Lis Pendens (which is Latin for “suit pending”) or a Notice of Default, and initiate the procedure for a Judicial Foreclosure. This can be a long and involved process-- much longer than a trust deed foreclosure. Many states require it though, as an added protection to the borrower, requiring a judge to look over the terms of the mortgage to ensure that they are legal and fair.

One case in which a court may invalidate a procedure is a promissory note foreclosure request. Recently, many borrowers have been successful in keeping their homes by forcing their mortgagees to produce a note for foreclosure. Since mortgages were frequently sold to larger banks, repackaged and then resold to investors, many promissory notes apparently got lost in the shuffle, filed away in warehouses and sometimes even thrown away. Even in the case of a deed of trust foreclosure, the lender is still required to produce the original promissory note but following different processes depending on which state you're in.