Reverse Mortgage, A Non-Negotiable Instrument

Take a dollar bill in your wallet; it says, “This note is legal tender for all debts, public and private.”  Whoever holds that note has the right to enforce it, that is a note.  Most Mortgage Notes are unconditional to pay sum certain with interest, so most Mortgage Notes are negotiable instruments.  In Florida, whoever has the right to enforce the Note has the right to enforce the Mortgage.  In a Reverse Mortgage, is the promise to pay unconditional? A Reverse Mortgage puts a lien on your house and you have an equity line.  The lender is either going to give you a line of credit up front, or along the way, and when you die, the mortgage is due. A Reverse Mortgage is NOT unconditional; you do not have to pay it.  The Note itself says that the lender’s only way to collect is to sell the property.  It is not negotiable because it IS conditional.  Thus, a Reverse Mortgage is non-negotiable; you cannot transfer it by just signing the back of it.  There is a simple fix—Assignment of Mortgage—but most lenders do not do that. With a regular Mortgage Note, if you endorse it in blank you can […] Read More

What Isn’t A Negotiable Instrument?

A Negotiable Instrument is an unconditional promise to pay a certain amount of money and no other undertakings.  It is like a courier without luggage. Some notes are negotiable instruments, but not all. When you buy a car, that note is not a negotiable instrument because that note has so many things with it.  You cannot just say pay to the order of…and endorse it over to someone else.  It is a note, but not a negotiable instrument. Whereas, if you write a check to me, and I lose the check, someone who picks up the check can cash it.  A check is a negotiable instrument. Similarly, most mortgages have notes that are negotiable instruments.  If you have the note, you can transfer enforcement of a foreclose.  A reverse mortgage note; however, is not a negotiable instrument—you cannot endorse it and hand it to someone—possession is not going to work.   Read More