Ch 9 - Mortgage Theiry

Question 1

A formal notice of a pending legal proceeding

Answer 1

Lis pendens

Question 2

This clause allows the holder of the mortgage to sell the property at public auction without court involvement should the borrower default

Answer 2

Power of sale clause

Question 3

This instrument executed by the mortgagor sets forth the exact unpaid balance of the mortgage and the interest rate

Answer 3

Estoppel certificate

Question 4

The practice by which a borrower offers collateral to secure a debt or a borrower, as a condition precedent to a loan, or has a third party pledge collateral for the borrower

Answer 4

Hypothecation

Question 5

A document that the lender returns with the promissory note to the borrower once the loan is paid

Answer 5

Satisfaction of mortgage

Question 6

This procedure allows the lender to proceed against the borrowers unsecured assets

Answer 6

Deficiency judgment

Question 7

To give up possession of the property to the lender while it serves as collateral

Answer 7

Pledging

Question 8

A legal procedure whereby the mortgage property is either sold to a third-party or transferred to the lender in order to satisfy the debt

Answer 8

Foreclosure

Question 9

The deed in Lieu of foreclosure is also called a…

Answer 9

Friendly foreclosure

Question 10

True or false:

At any time before the property goes on sale, the borrower may redeem his/her property by paying off the debt

Answer 10

True

Question 11

True or false:

The promissory note is a contract between a borrower and a lender

Answer 11

True

Question 12

States in which ownership is subject to defeat upon full payment of the debt or performance of the obligation

Answer 12

Title theory states

** VA is a title theory state **

Question 13

True or false:

A loan may not be pre-paid without a pre-payment clause allowing for it

Answer 13

True

Question 14

True or false:

The basic purpose of a deed of trust is the same as a mortgage

Answer 14

True

Question 15

What are the three types of foreclosure?

Answer 15

• judicial
• non-judicial
• strict

Question 16

When does the borrower agree to uphold these covenants:

• Covenant to pay indebtedness
• Covenant to pay taxes
• Covenant to pay insurance
• Covenant of good repair
• Covenant against removal
• Covenant to acknowledge indebtedness
• Covenant to pay legal expenses

Answer 16

When he/she signs the mortgage

Question 17

What is the lender‘s preferred method of sale because it simplifies the foreclosure process and is less expensive than filing a lawsuit?

Answer 17

Non-judicial foreclosure, also known as sale by advertisement

Question 18

What are five clauses typically found in mortgage contracts?

Answer 18

CASED

• condemnation
• alienation
• subordination
• escalation
• defeasance

Question 19

A note that serves as the written evidence of that must have what features to be valid?

Answer 19

• be in writing
• be between a borrower and a lender who both have contractual capacity
• State the borrowers promise to pay a certain sum of money
• show the terms of payment
• be signed by the borrower (principal)
• be voluntarily delivered by the borrower and accepted by the lender

Question 20

The _________ allows the lender to demand that the entire loan balance be immediately paid in full should the borrower fail to make timely payments or comply with the other covenants in the mortgage contract and promissory

Answer 20

Acceleration clause

Question 21

What three parties are involved with a note is secured by a deed of trust?

Answer 21

• the borrower (the trustor)
• the lender (the beneficiary)
• a neutral 3rd party (the trustee)

Question 22

When a satisfaction or release is recorded, a recording office employee makes a note of its book and page location on the margin of the recorded mortgage, called a…

Answer 22

Marginal release