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.
What is a trustor?
- 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.
What is trustee?
- The trustee is the person who manages the trust usually appointed by the trustor.
- The trustor is also often the trustee in living trusts.
A Beneficiary is………
- a person who derives advantage from something
- ex: a trust, will, or life insurance policy.
Hypothecation
- 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
Deed in Lieu of Foreclosure
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.
What is Power of Sale?
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
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
A: Deed In Lieu Of Foreclosure
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
A: Person Who Creates The Trust
Which of the following is an example of beneficiary?
A: Trust
B: Will
C: Life Insurance Policy
D: All Of The Above
D: All Of The Above
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
A: The Borrower In A Mortgage, Typically A Homeowner
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
A: As Asset As Collateral Security To The Lender
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
A: Wrap Around Mortgage
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
A: Authorizing The Mortgage To Sell Property In The Event Of Default In Order To Repay The Mortgage Debt
Utah is a predominately a ______ state
A: Title Theory
B: Lien Theory
C: Mortgage Theory
D: None Of The Above
B: Lien Theory
