This solution worked for me as I had similar issue.
In your controller, when saving the note you would do something like
entity.Note = HttpUtility.HtmlEncode(model.Note.Replace(Environment.NewLine, "<br>"));
Then when displaying in your view you could do something like
<textarea name="Note"><br mode="hold">@(new HtmlString(HttpUtility.HtmlDecode((note.Note1))))<br mode="hold"></textarea>
That should work, I did not compile this/pull this from existing code so you may have to tweak it to meet your needs. But it should hopefully steer you in the right direction.