Mortgage Law 1 Flashcards
What is Mortgage Law?
- A mortgage is a security interest in real property held by a lender as a security for a debt, usually a loan of money.
- A mortgage in itself is not a debt, it is the lender’s security for a debt
- Mortgages loans vary widely in terms of amount, repayment terms, and interest rates.
- If a mortgage goes unpaid, the mortgagee is granted the right to foreclose.
Title Theory
- Title theory is a doctrine of property law that a mortgage transfers legal title of the property to the mortgagee, who holds it until the mortgage has been satisfied.
- Only a certain number of American states have adopted this theory, and they are called title states or title theory jurisdictions
Lien Theory
- In a lien theory state, the buyer holds the deed to the property during the mortgage term
- The buyer promises to make all payments to the lender and the mortgage becomes a lien on the property, but title remains with the buyer
Deed of Trust Theory
Utah is considered as a deed of trust theory state, which is more similar to a lien theory. Lien and deed of trust theory mean that the borrower holds title to the property for the duration of a loan. In a title theory state, the lender actually holds title to the property until
the loan is paid.
What is lien theory?
A: The Buyer Holds The Deed To The Property During The Mortgage Term
B: When The Agent Hands Over The Deed To The New Owner
C: When The Buyer Receives The Deed
D: None Of The Above
A: The Buyer Holds The Deed To The Property During The Mortgage Term
Another note for promissory note
A: Deed
B: Note Payable
C: The Contract
D: None Of The Above
B: Note Payable
All inclusive trust deed is
A: Wrap Around Mortgage
B: Title Deed
C: Lien Theory
D: None Of The Above
A: Wrap Around Mortgage
Mortgagee is
A: The Lender In A Mortgage
B: The Borrower
C: The Agent
D: The Brokerage
A: The Lender In A Mortgage
Why do most states practice Lien
Theory?
- Examples:
- John’s house is in New York, which is a lien theory state, so the title to her home belongs solely to her.
- When she borrowed money to buy her home, she signed a mortgage
- Lets talk about Kelly, her home is located in a title theory state, Nevada.
*To secure a loan to buy her home, Jenny had to place her title into a trust. Instead of signing a mortgage, Jenny signed a deed of trust
Promissory note
- Some promissory note, they tend to relatively short
- IOU- I promise to pay you
- The promissory note is secured by the deed of trust
- This referred to as note payable * It is a legal instrument in writing outlining for a promise to pay a sum of money to another party at a fixed or future time under specific conditions
Trust Deed
- In real estate in the United States, a deed of trust or trust deed is a deed wherein equitable title in real property is transferred to a trustee
- Which holds it as security for a loan between a borrower and lender. The legal title remains with the borrower.
All Inclusive Trust Deed (AITD)
This is often referred to as the wrap around mortgage This is a new deed of trust which includes the balance due on the existing note, plus new funds advanced
A Mortgage is….
- “A legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt”.
A Mortgagor is ……
- the borrower in a mortgage, typically a homeowner.
A Mortgagee is……
- The lender in a mortgage, typically a bank.