Mortgage Law 1

Question 1

What is Mortgage Law?

Answer 1

• 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.

Question 2

Title Theory

Answer 2

• 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

Question 3

Lien Theory

Answer 3

• 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

Question 4

Deed of Trust Theory

Answer 4

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.

Question 5

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

Answer 5

A: The Buyer Holds The Deed To The Property During The Mortgage Term

Question 6

Another note for promissory note
A: Deed
B: Note Payable
C: The Contract
D: None Of The Above

Answer 6

B: Note Payable

Question 7

All inclusive trust deed is
A: Wrap Around Mortgage
B: Title Deed
C: Lien Theory
D: None Of The Above

Answer 7

A: Wrap Around Mortgage

Question 8

Mortgagee is
A: The Lender In A Mortgage
B: The Borrower
C: The Agent
D: The Brokerage

Answer 8

A: The Lender In A Mortgage

Question 9

Why do most states practice Lien
Theory?

Answer 9

• 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

Question 10

Promissory note

Answer 10

• 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

Question 11

Trust Deed

Answer 11

• 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.

Question 12

All Inclusive Trust Deed (AITD)

Answer 12

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

Question 13

A Mortgage is….

Answer 13

• “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”.

Question 14

A Mortgagor is ……

Answer 14

• the borrower in a mortgage, typically a homeowner.

Question 15

A Mortgagee is……

Answer 15

• The lender in a mortgage, typically a bank.

Question 16

What is a trustor?

Answer 16

• The trustor or “grantor” of a trust is the person who creates the trust.
• The trustor is the one who contributes property to the trust.

Question 17

What is trustee?

Answer 17

• The trustee is the person who manages the trust usually appointed by the trustor.
• The trustor is also often the trustee in living trusts.

Question 18

A Beneficiary is………

Answer 18

• a person who derives advantage from something
• ex: a trust, will, or life insurance policy.

Question 19

Hypothecation

Answer 19

• Hypothecation means offering an asset as a collateral security to the lender whereby the ownership lies with a lender and the possession is enjoyed by the borrower.
• In a case of default by the borrower, the
  lender can exercise his ownership rights to seize the asset

Question 20

Deed in Lieu of Foreclosure

Answer 20

A deed in lieu of foreclosure is a deed instrument in which a borrower conveys all interest in a real property to the lender to satisfy a loan that is in default and avoid foreclosure proceedings.

Question 21

What is Power of Sale?

Answer 21

Power of sale is a clause written into a mortgage authorizing the mortgagee to sell the property in the event of default in order to repay the mortgage debt

Question 22

Is a deed instrument in which a borrower conveys all interest in a real property to the lender to satisfy a loan that is in default and avoid foreclosure proceedings
A: Deed In Lieu Of Foreclosure
B: Foreclosure Paper
C: None Of The Above
D: All Of The Above

Answer 22

A: Deed In Lieu Of Foreclosure

Question 23

Trustor or grantor of a trust is
A: Person Who Creates The Trust
B: The Person Who Transfer The Funds
C: The Account That Has All The Funds
D: None Of The Above

Answer 23

A: Person Who Creates The Trust

Question 24

Which of the following is an example of beneficiary?
A: Trust
B: Will
C: Life Insurance Policy
D: All Of The Above

Answer 24

D: All Of The Above

Question 25

Mortgagor is?
A: The Borrower In A Mortgage, Typically A Homeowner
B: Typically The Lender, Who Assist With The Loan
C: The Family That Owns The Home
D: All Of The Above

Answer 25

A: The Borrower In A Mortgage, Typically A Homeowner

Question 26

Hypothecation is?
A: As Asset As Collateral Security To The Lender
B: As Asset That Is Important To The Buyer
C: As Asset That Will Belong To The Lender
D: None Of The Above

Answer 26

A: As Asset As Collateral Security To The Lender

Question 27

All inclusive deed is also known as
A: Wrap Around Mortgage
B: The Buyer’s Mortage
C: The Deed That Is Being Transferred
D: All Of The Above

Answer 27

A: Wrap Around Mortgage

Question 28

Power of a sale is
A: Authorizing The Mortgage To Sell Property In The Event Of Default In Order To Repay The Mortgage Debt
B: Authorizing The Mortgage To Be Given To Lender
C: Breaching A Contract For The Client
D: All Of The Above

Answer 28

A: Authorizing The Mortgage To Sell Property In The Event Of Default In Order To Repay The Mortgage Debt

Question 29

Utah is a predominately a ______ state
A: Title Theory
B: Lien Theory
C: Mortgage Theory
D: None Of The Above

Answer 29

B: Lien Theory