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ravi > chapter 4 mortage law > Flashcards

chapter 4 mortage law Flashcards

1
Q

any clause contained in a mortage which clogs the equity of redemption is:

  1. valid
  2. void
  3. illegal
  4. usurious
A
  1. void
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2
Q

when you hear the word mortgage, what should you think of?

A

contract!

mortgage = contract = when you give a contract for the loan, you always have your equity of redemption

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3
Q

equity of redemption means?

A

the right of a mortgagor over the mortgaged property, especially the right to redeem the property on payment of the principal, interest, and costs.

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4
Q

after a borrower has given a mortgage of real property, the borrowers remaining interest is described at law as

  1. a right of foreclosure
  2. a common-law mortgage
  3. the equity redemption
  4. none of the above
A
  1. the equity redemption
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5
Q

after the contractual right to redeem has passed on a mortgage

  1. the borrower must give up the mortgaged property
  2. the lender is the owner of the mortgage property
  3. an equitable right to redeem still exists
  4. the borrower owes a higher rate of interest on the arrears than on the principle if the borrower redeems
A
  1. an equitable right to redeem still exists

be careful on answer 1 it says “BORROWER” not lender!!

the thing to understand (that we didnt know) is the term length is only a fraction of the total mortgage amortization) and that even after the term which could be 3 or 5 years, there is still more money owing and a new term must be set up or paid out

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6
Q

what does contractual right to redeem mean?

A

term length
the right of redemption refers to the right of the borrower to ‘redeem’ the mortgage once the loan and all of the interest has been repaid. Following this repayment, the mortgage ends and the lender no longer has any right over the property.

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7
Q

difference between term length and amortization?

A

the amortization is the total length of the principle

the term length is shorter, and its the time period that you are obligated to that specific lender (1, 2, 5 year etc)

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8
Q

what does PV mean?

A

principle value

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9
Q

when a mortgagor grants a mortgage subsequent to a first registered mortgage, the mortgagor has created:

  1. an equitable mortgage
  2. a legal mortgage
  3. an assignment of the first mortgage
  4. none of the above
A
  1. an equitable mortgage

subsequent mean- you’ve granted that mortgage after(secondary to the first mortgage)

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10
Q

who is the mortgagor?

A

the borrower

remind yourself that mortagor and borrower both have two “o”

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11
Q

who is the mortgagee

A

lender

remember, there is 2 “e” in both lender and mortgagee

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12
Q

which of the following statements is True?

  1. an acceleration clause allows the lender to accelerate the expiry of the term of the mortgage and demand repayment of the entire loan amount provided that the borrower is given three months notice
  2. upon the execution of the mortgage contract, the lender is required to advance the the total amount of the mortgage immediately, regardless of the terms of the mortgages
  3. under the property law act, the lender cannon require the borrower to obtain the advance consent of the lender before making any alterations or improvements to the property
  4. the mortgage contract, in addition to the common law, provides the lender with a number of options and remedies to pursue when the borrower defaults on the mortgage. it is up to the lender to choose to remedy it feels is the most advantages in the circumstances
A
  1. the mortgage contract, in addition to the common law, provides the lender with a number of options and remedies to pursue when the borrower defaults on the mortgage. it is up to the lender to choose to remedy it feels is the most advantages in the circumstances

for answer 3- the lender can require the borrower to get permission for alterations, because if you change something, it might affect the value of the property, and the lender might not be ok with it

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13
Q

acceleration clause?

A

if you default on your payments, you have 7 days to get sorted!!!

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14
Q

with respect to the application of the environmental management act (EMA) to mortgage, which of the following is true?

  1. lenders can face liability under the EMA if that become registered owners of the property as a result of a foreclosure
  2. the EMA automatically makes a lender partially responsible for environmental contamination of a property if the lender mortgage was registered on title at the time of contamination
  3. lenders can file a notice with the EMA before providing mortgage proceeds directing the Director of Waste Management to conduct an environmental assessment of the subject property
  4. the EMA has no application to mortgages
A
  1. lenders can face liability under the EMA if that become registered owners of the property as a result of a foreclosure

in other words, if a borrower defaults, and the lender becomes the official registered owner of the property, they are liable to the ema rules on the property now

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15
Q

which of the following statements regarding a due on sale clause is True?

  1. a due on sale clause provides that when a property is sold, the buyer of the mortgaged property has the option to assume the mortgage
  2. if a mortgage contains a due on sale clause any outstanding balance on a mortgage must be assumed by the buyer of the mortgagedd property
  3. if the mortgage contains a due on sale clause, the borrower cannon sell the mortgaged property without written approval from the lender
  4. a due on sales clause allows the lender to collect on all amounts owing under the mortgage, including prepayment penalties upon sale of the property
A
  1. a due on sales clause allows the lender to collect on all amounts owing under the mortgage, including prepayment penalties upon sale of the property

for answer 2- (confusing) it is the “Seller” who would be responsible for paying back the lender, not the “new” buyer. see how tricky the word play is

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16
Q

what is a “due on sale clause”

A

allows the lender to collect all of the monies they have coming to them (all interests) and also their could be pre payment penalties (person wants to exit before the mortage is up)

17
Q

the process whereby a mortgage lender transfers his interest in a mortgage to a 3rd party is known as

  1. assumptions
  2. take back
  3. assignment
  4. forclosure
A
  1. assignment
18
Q

difference between assumption and assignment

A

borrowers can allow the assumption

lenders can allow assignment

19
Q

when the original loan agreement between the lender and the seller of the property is replaced by a new loan agreement between the lender and the buyer of the property for the mortgage debt, what legal concept has occurred?

  1. assignment
  2. novation
  3. redemption
  4. forclosure
A
  1. novation
20
Q

what is novation

A

when a new contract is made between lender and second owner that is taking over the term (assuming) from the first owner

21
Q

describe the best answer in regards to the steps in forclosure

  1. demand letter, petition, NISI, absolute foreclosure
  2. NISI, petition, judicial sale, absolute forclosure
  3. petition of hearing, NISI, demand letter, absolute foreclosure
  4. NISI, demand letter, petition, absolute foreclosure
A
  1. demand letter(first step), petition, NISI, absolute foreclosure
    note: you need to know the steps “in order”

because demand letter is listed 3rd or 4th in answers 3 and 4, both are incorrect!!

22
Q

what are the foreclosure steps in order

A
  1. dmand letter to the borrower
  2. petition
  3. petition hearing
  4. order NISI (redemption period)
  5. order of conduct sale (judicial sale) or order absolute of foreclosure
23
Q

how long is order NISI and what does it do

A

think of NISI as NICE GUY it gives you 6 months to get your financials sorted out and sell the property before the official foreclosure takes place

24
Q

in a foreclosure proceeding, the court order that the lender most commonly seeks at the first court appearance is a

  1. action on the personal covenant
  2. order NISI
  3. order for the conduct of sale
  4. order absolute
A
  1. order NISI
25
Q

when an order absolute of foreclosure is obtained by a petitioner who is in the position of a second mortgagee:

  1. that mortgagee has right to sue the borrower on his or her personal covenant
  2. the petitioner may sell the property after taking title to it but will have to account to the borrower for any profit which might be realized in excess of the mortgage debt
  3. all other charges, liens, ecumbrances and interests registered on the borrower’s title are foreclosed or “wiped” off the title
  4. the order forecloses the registered owner interest in the mortgaged land permits the petitioner to transfer the title into his or her own name
A
  1. the order forecloses the registered owner interest in the mortgaged land permits the petitioner to transfer the title into his or her own name
26
Q

personal covenant

A

A legal agreement or promise regarding a piece of real estate, which binds the party who makes the covenant but which does not pass from one owner to another when the land is conveyed.

27
Q

jordan grants mary a mortgage over his property, black acre. One of the terms in the standard mortgage contract that they execute allows mary, aside from pursuing a foreclosure, to exercise the remedies of an ordinary creditor if jordan defaults. if jordan defaults. If jordan defaults and mary pursues, this option, she will be taking action on the

  1. order NISI
  2. personal covenant
  3. collateral advantage
  4. priorities
A
  1. personal covenant

for answer 1- NISI is part of the foreclosure process

28
Q

personal covenant?

A

promise- that they will repay whatever debt they owe

29
Q

what do priorities mean

A

refers to a mortgage lender losing priority over certain other charges even though the mortgage was registered first)

think of strata fees or government fees!!!

ravi (20 decks)

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