Find out how a lost note didn’t stop this foreclosure – and what it means for lenders
Losing a promissory note won’t stop a foreclosure in Rhode Island, the state’s Supreme Court ruled on November 6, 2025 – clarifying the rules for mortgage professionals.
In January 2006, Wayne A. Mallory signed a promissory note for a $28,000 loan from Sovereign Bank, secured by a second mortgage on property at 21B Waterview Drive, Smithfield, Rhode Island. The mortgage named the Mallorys as borrowers, Sovereign Bank as lender, and Mortgage Electronic Registration Systems, Inc. (MERS) as mortgagee, acting as nominee for the lender and its successors and assigns.
After a series of assignments, Porch Swing Holdings LLC became the holder of the second mortgage. It is undisputed that the original promissory note was lost and that Porch Swing Holdings never possessed it. On May 27, 2022, Porch Swing Holdings filed a verified complaint in Providence County Superior Court, seeking to foreclose after Mallory failed to make timely principal and interest payments, resulting in default.
The Mallorys objected, arguing that under Rhode Island law, specifically G.L. 1956 § 6A-3-309, only the party that lost the note could enforce it. They asserted that because Porch Swing Holdings admitted it never possessed the note, it could not enforce the promissory note or foreclose.
Porch Swing Holdings moved for summary judgment, arguing that as the assigned mortgagee, it was entitled to foreclose regardless of possession of the note. The trial justice agreed, citing Rhode Island Supreme Court precedent, including Ocwen Loan Servicing, LLC v. Medina and Pimentel v. Deutsche Bank National Trust Company, which held that a mortgagee need not hold the note to foreclose on a property.
The trial justice granted summary judgment for Porch Swing Holdings, dismissed the Mallorys’ counterclaims with prejudice, and declared Porch Swing Holdings entitled to foreclose on the property, subject to an order of sale by the Superior Court. The Mallorys appealed, maintaining their argument that foreclosure could not proceed without possession of the note.
On appeal, the Rhode Island Supreme Court affirmed the lower court’s decision. The Court emphasized that, under Rhode Island law, the right to foreclose is derived from the mortgage contract, not the promissory note. The Court cited its own precedents, which have held that a mortgagee does not need to possess the note to exercise the power of sale, provided the mortgage was properly assigned and the borrower is in default.
The Court also addressed the defendants’ reliance on statutory provisions, finding that the statutes did not alter the established principle that foreclosure rights are governed by the mortgage instrument. The Court concluded that Porch Swing Holdings was entitled to foreclose even though it never possessed the original promissory note.
The decision is not final, as the case remains open regarding two other defendants – Milford Federal Savings and Loan Association and the Rhode Island Department of Revenue Division of Taxation – Employer Tax. The matter has been remanded to the Superior Court for further proceedings.
This decision provides clarity on a recurring issue in foreclosure proceedings: the necessity of possessing the original promissory note. The ruling confirms that, in Rhode Island, the right to foreclose is tied to the mortgage assignment and borrower default, not to physical possession of the note. This outcome is particularly relevant for those managing portfolios with complex assignment histories or legacy documentation issues, as it confirms that foreclosure can proceed even when the original note is lost, provided the mortgage is properly assigned and the borrower has defaulted.
