OVERVIEW OF WHAT HAPPENS TO THE PROMISSORY NOTE
When you sign the promissory note, the lending institution records the note on their books as a deposit into a demand deposit account (like a checking account or a savings account), in your name. From that demand deposit account, the lending institution disburses funds through a wire or a check from that demand deposit account.
When the wire transfer papers or the check hits the check clearing house (as all wires and checks do), the clearing house checks their data banks and finds that indeed there are funds in that account. They mark the wire transfer papers or the checks paid and away they go. However, the only funds in that demand deposit account happens to be the promissory note that you signed.
Then the lending institution uses the note as collateral at the Federal Reserve Window to obtain a loan for all of the money they lent out during a given time period. The check for the money is deposited into the lending institution’s asset account, not the demand deposit account that the promissory note was deposited into. The Federal Reserve Window writes the lending institution a check, backed by the good faith and credit of the United States Government. At some point, the Treasury Department backs up that check with debt instruments such as Treasury Bills, which are retired when the tax payers pay for them (with interest, by the way).
Then the promissory note is physically sold on the secondary markets, usually at a discount. The money for that sale is deposited into the lending institution’s asset account, not the demand deposit account that the promissory note was deposited into. The secondary markets use that note as collateral to leverage for more money in various investments. Some of that money is shared with investors.
On top of that, the lending institution or an assignee proceeds to collect the principle and interest payments from you, the person who signed on the promissory note. Over a 30 year period of time, that turns out to be approximately 3 ½ times the amount you thought you borrowed from the lending institution.
How much money did the lending institution make in this transaction? How much of their money did they risk? Did you know that you increased the national debt by taking out a loan on your property? Now that you know the trail of your promissory note, how do you feel? Did you know that this model of banking has not only been used against you, but against your parents, grandparents, great-grandparents and now your children and grandchildren?
Now here’s the real kicker. If you are unfortunate enough to find yourself being foreclosed on by the lending institution, the promissory note is used again. The lending institution uses the promissory note (at least their claim on the promissory note) to bid on the court house steps for ownership of your home. They usually are the highest bidder - all for your signature on a piece of paper.
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