21) Mortgages

Question 1

Mortgage

Answer 1

A document that uses real property to secure payment of debt.

Question 2

Secured Debt

Answer 2

A loan that is secured by property.

Question 3

Note

Answer 3

The borrower’s written promise to repay a loan according to its terms. A note serves as evidence of the debt for which the mortgage is the security. Contains (amount of loan, interest rate and time and method of repayment).

Question 4

Title-Theory

Answer 4

The historical theory that the mortgage conveys title to the mortgagee. Only practiced in some states and even there although the mortgagee acquires title, the mortgagee does not acquire the right of possession unless the mortgagor defaults.

Question 5

Lien-Theory

Answer 5

The theory that a mortgage is a lien, as it is a device used by debtors and creditors to secure a debt.

Question 6

Deed of Trust

Answer 6

A legal instrument in which a borrower transfers real property to a trustee as security for a debt. The lender is the beneficiary of the trust.

Question 7

Long-Term Escrow

Answer 7

A financing device that combines the land installment contract and the escrow.

Question 8

Satisfaction of Mortgage

Answer 8

A written statement by the mortgagee that the debt secured by the mortgage has been paid; also called a release of mortgage.