Negotiable Instruments Law: The Mortgage Follows The Note

LexisNexis ( September 18, 2017, 11:42 AM EDT) -- One of the enduring principles of negotiable instruments law is that the "mortgage follows the note."  Thus, even though a lender may think it has a perfected security interest in a piece of real estate through a recorded mortgage or deed of trust, failure to perfect against the note itself—by taking possession or filing a UCC financing statement—spells doom for the lender.  That lesson was learned the hard way in a recent bankruptcy case from Oregon.  We think the decision hits the target in the middle....