Posted by Michael Morrongiello on June 06, 2002 at 15:44:07:
Roi:
First off, Notes typically do not get recorded. The promissory Note is simply the debt obligation or “promise to repay the debt” … The promissory Note is usually secured by recording a Mortgage (or Deed of Trust) lien against a property which is legally described as the collateral.
So, if this is a Note that has NO collateral backing it, its value is VERY questionable.
As for the bankruptcy issue; you did not specify whether it was the payors (the parties obligated to making the payments on the Note) or the Payee’s (the Note holders who receive the payments)that were in active bankrupcty? I assume that its the payors…
While this Note can be sold, currently because the payors are involved in an active bankrupcty filing, the Mortgage and Note would be considered “damaged goods” and bring a reduced pay price that would have to be commensurate with the perception of risk. Clearly if these payors are involved in chapter 13 type bankrupcty filing, they may not be able to fufill their repayment plan obligation to creditors.
Once the bankrupcy is over with, assuming the payors resurrect their credit background, the Note becomes more desirable.
Hope this helps.
Warmly,
Michael Morrongiello