Mortgage

Question 1

Mortgage

Answer 1

security device used to secure repayment of a debt
* the note: borrower’s promise to repay the debt or loan
* the mortgage: device that provides security to the note

Question 2

Purchase Money Mortgage

Answer 2

A purchase-money mortgage is a mortgage where the borrower takes out a loan for the purpose of purchasing property

Question 3

Future-Advance Mortgage

Answer 3

A future-advance mortage is a line of credit used for home equity, construction, business, and commercial loans (often called a second mortgage)

Question 4

Assume the mortgage

Answer 4

• If the transferee assumes the mortgage, the transferee is primarily liable upon default while the original borrower is secondarily liable.
• Some jurisdiction says that if the transferee pays the morgage payments, he impliedly assumes the mortgage. (brought up on the MEE but considered the wrong answer in MBE).

Question 5

Subject to the mortgage

Answer 5

• If the transferee takes title subejct to the mortgage, the transferee is NOT personally liable upon default while the original borrower remains liable
• this is the default/presumed option

Question 6

Novation

Answer 6

A novation occurs if the initial mortgagor, the new transferee, and the mortgagee all agree that the mortgagor is no longer liable and the transferee assumes all of the mortgagor’s duties.