Note

A note is a legal document that a borrower signs promising that he or she will repay a mortgage loan at a specific interest rate over a set period of time. The note is also called a "promissory note." A note can be drawn up for any type of property. The most marketable notes are those on single-family residences and some commercial types of properties. A real estate note secures the loan by placing a mortgage on the property being purchased. If the borrower defaults on the loan, the lender can then begin foreclosure proceedings, and the borrower must surrender the property. The lender can then resell the property to recoup its losses. In some instances, a lender may begin forfeiture proceedings on a note that has gone into default. If the borrower/homeowner brings the loan current, the loan will continue in full force and effect for that borrower.