Chapter 15

Question 1

Whats a mortgage?

Answer 1

An estate in land; a document evidencing a debt owed by the borrower (mortgagor) to the lender (mortgagee). Registration of the mortgage in the land title office transfers the mortgagor’s interest in land to the mortgagee as security for the repayment of the debt and creates an enforceable security interest in the land

Question 2

What is a lender called?

Answer 2

MORTGAGEE

Question 3

What does a lender receive from a borrower

Answer 3

Receives mortgage as security for the loan

Question 4

What is a BORROWER called?

Answer 4

MORTGAGOR

Question 5

What does a borrower grant to a lender?

Answer 5

grants mortgage as security for loan

Question 6

Who is a guarantor?

Answer 6

one who becomes contingently or secondarily liable for another’s debt or performance

Question 7

What is a vendor take back mortgage?

Answer 7

a mortgage taken back by the vendor from the purchaser to facilitate a sale - vendor becomes the mortgagee and the purchaser becomes the mortgager

Question 8

Wha is reverse annuity mortgage

Answer 8

An innovative loan arrangement in which the lender makes periodic payments to the borrower during the loan term. At the end of the term, the borrower will have to repay the balance owing by refinancing or selling the property

Question 9

What is prepayment?

Answer 9

where a borrower seeks to pay a substantial amount or the entire amount owing on the mortgage prior to the expiration of the mortgage term

Question 10

What does “assign” mean?

Answer 10

to transfer over to another (e.g., “I assign all right, title and interest in Blackacre to my wife, Elaine”)

Question 11

what is a assumable mortgage?

Answer 11

a mortgage that allows a buyer to assume or take over the responsibilities and liabilities under the mortgage from the seller (original borrower)

Question 12

What is foreclosure?

Answer 12

a legal action taken by a mortgagee to
realize on its security, by reason of the default on the mortgage

Question 13

What is order nisi?

Answer 13

a final order of the court in the foreclosure process which may not be challenged except by way of appeal

Question 14

agreement for sale

Answer 14

a contract by which the owner of land (seller) agrees to sell land to another (buyer) who agrees to buy it. The buyer’s interest is registered in the land title office as a charge against the seller’s certificate of title. The contract provides that the purchase price will be paid by instalments

Question 15

present equitable mortgage

Answer 15

An agreement to grant a mortgage in the future

Question 16

What are Express terms and Implied terms?

Answer 16

Express terms are those that are stated outright in the contract /Implied terms are those that are not specifically stated in the contract but may be implied by statute or case law

Question 17

What does the phrase “there shall be no clog on the equity of redemption” mean?

Answer 17

a borrower cannot be prevented by the terms of the mortgage from eventually redeeming his or her property free from the conditions contained in the mortgage.

Question 18

What is a covenantor

Answer 18

primary debtor and is responsible for the loan as though they themselves were the borrower. This means that a covenantor is responsible for the obligations both alone and together with the borrower. Furthermore, the lender may collect from the covenantor before the lender exhausts all available remedies against the borrower.

Question 19

What is a guarantor?

Answer 19

A guarantor, however, is a secondary debtor and will only be responsible for repaying the borrower’s loan after the lender has exhausted every available remedy against the primary debtor. Therefore, it is easier for lenders to enforce loans against a covenantor than a guarantor.

Question 20

Interim Blanket Mortgage

Answer 20

commonly used in condominium developments or subdivisions. In order to initially raise money for the project, a mortgage is placed on the whole development. However, the developer/ borrower will want to release this mortgage from the individual strata lots or subdivision lots as they are purchased. Therefore, the blanket mortgage will contain a clause which permits the mortgage to be released from each individual lot as it is purchased, but keeps the security over the rest of the project

Question 21

What is Bridge financing?

Answer 21

Bridge financing, as the name suggests, is a type of interim financing whereby a borrower will receive a loan and grant a mortgage to a lender for a short period of time while long-term financing is being pursued. Bridge financing can be used where a borrower has purchased property but has not sold his or her existing property and financing to purchase the new property is required. Another situation where bridge financing is used is when a borrower needs immediate financing while a financial institution is considering the borrow- er’s credit worthiness and arranging security for long-term financing.

Question 22

if a document requires interest to be paid but the rate is not set out, then the rate allowed by law

Answer 22

5%

Question 23

What are Blended payments?

Answer 23

payments which do not separate the interest portion from the principal portion.

Question 24

what is interest at a criminal rate?

Answer 24

an effective annual rate of over sixty percent.