No, we are not aware of any federal or state laws or regulations that would require your bank to return promissory notes to borrowers after the SBA has forgiven their Paycheck Protection Program (PPP) loans. Additionally, we are not aware of any SBA guidance recommending that financial institutions return PPP-related promissory notes after forgiveness. Consequently, we do not believe that you are required to return a borrower’s promissory note unless the note itself requires you to do so.

While the Illinois Mortgage Certificate of Release Act requires lenders to deliver a mortgage release to a customer when the loan is paid off (unless the lender provides a required notice or the title insurance company files a certificate of release), this requirement applies only to mortgage loans that are secured by real property. Similarly, your primary federal regulator (the OCC) has issued examination procedures requiring examiners to ask whether your bank has returned “the original promissory note to the borrower in a timely manner,” but again, this would apply only in the context of mortgage lending.

For resources related to our guidance, please see:

• Mortgage Act, 765 ILCS 905/2 (“Except in the case of a mortgage that is required to be released under the Mortgage Certificate of Release Act, every mortgagee of real property . . . having received full satisfaction and payment of all such sum or sums of money as are really due to him or her from the mortgagor . . . shall make, execute and deliver to the mortgagor . . . an instrument in writing releasing such mortgage or deed of trust in the nature of a mortgage or shall deliver that release to the recorder or registrar for recording or registering. If the release is delivered to the mortgagor . . . it must have imprinted on its face in bold letters at least 1/4 inch in height the following: ‘FOR THE PROTECTION OF THE OWNER, THIS RELEASE SHALL BE FILED WITH THE RECORDER OR THE REGISTRAR OF TITLES IN WHOSE OFFICE THE MORTGAGE OR DEED OF TRUST WAS FILED’. The recorder, or registrar, upon receipt of such a release and the payment of the recording or registration fee, shall record or register the release. A certificate of release issued and recorded by a title insurance company or its duly appointed agent pursuant to the Mortgage Certificate of Release Act shall satisfy the requirements of this Section 2.”)

• OCC Comptroller’s Handbook, Mortgage Banking, Internal Control questionnaire, printed page 145 (“79. When a borrower pays off a loan, does the bank file the mortgage release and satisfaction and return the original promissory note to the borrower in a timely manner?”)