Mortgages

Question 1

what two documents are in a mortgage

iow: mortgage is made up of

Answer 1

promissory note (debt) + lien in land to secure debt (mortgage)

Question 2

what is a promissory note

Answer 2

mortgagor’s (debtor) personal obligation

Question 3

Who is the mortgagor?

Who is the mortgagee?

Answer 3

mortgagor** - debt_or_**

mortgagee** - l_ende_**r

Question 4

what is the mortgage

Answer 4

agreement that says that if the mortgagor quits paying, land can be sold to pay mortgagee

Question 5

what is a purchase money mortgage

Answer 5

loan given to home buyer by the seller selling the property to the buyer and seller takes as collateral a security interest in the home that the buyer is buying/seller is selling

taken out at the time of purchase process and used exclusively to buy the house

Question 6

what is a non-purchase money mortgage

Answer 6

When property that is already owned by the debtor (ie buyer) is put up as security for a loan. (kinda like a 2nd mortgage)

Question 7

in order for the mortgage to satisfy SOF it must

Answer 7

be in writing

Question 8

O sells to B

B assumes mortgage

who is liable for the mortgage

Answer 8

Both are

B (the grantee) primarily liable

O (the grantor) secondarily liable

** TIP: assume has two ss and when assuming two ppl will be liable **

NOTE:

• If grantee does sign*** then grantee ***is primarily liable to lender (i.e. bank) and original grantor (i.e. seller) becomes secondarily liable as a surety
• If the grantee does NOT sign an agreement for the mortgage NOT personally liable. Instead original grantor remains primarily and personally liable. If grantee does not pay, grantee’s only recourse is to foreclosure which wipes out the grantee’s investment in the land

Question 9

O sells to B

B take subject to mortgage

who is liable for the mortgage

Answer 9

B (the grantee) assumes no personal liability

Only O (the grantor) is personally liable

Question 10

foreclosure does not affect any interests _____ to the mortgage being foreclosed

Answer 10

senior

Question 11

first in time, first in right

Answer 11

creditor who records first takes first

Question 12

a junior mortgagee must be named as a party to a senior mortgagee’s foreclosure action because it has the right to pay off the senior mortgage to avoid being wiped out by foreclosure

Answer 12

–

Question 13

Who needs to be named in a foreclosure action

Answer 13

Only those with interests subordinate to that of the foreclosing party must be named in the foreclosure action. Failure to name a senior interest holder does not affect that party’s interest.

Question 14

Statutory redemption is the right of a mortgagor to recover the land after the foreclosure sale has occurred, usually by paying __________.

Answer 14

The foreclosure sale price

Question 15

When can a mortgagor exercise her statutory right of redemption?

Answer 15

After the foreclosure sale has occurred, usually six months or one year.

Question 16

Equitable redemption is the right of a mortgagor to recover the land by paying

Answer 16

the amount overdue on the mortgage, plus interest, at any time before the foreclosure sale.

Question 17

The order of priority for allocating mortgage foreclosure sale proceeds is as follows, from first to last:

Answer 17

1. Expenses of the sale, including attorneys’ fees, and court costs;
2. The principal and accrued interest on the foreclosing party’s loan;
3. Any junior lienors in the order of their priority; and last
4. The mortgagor

Senior lienors receive none of the proceeds. Because a senior lien remains on the property (i.e., may itself be foreclosed in the future), a senior lienor is not entitled to any of the money from the sale, even if there is a surplus.

Question 18

When is a lender entitled to a deficiency judgment?

Answer 18

when the proceeds of a foreclosure sale do not satisfy the mortgage debt

Question 19

What happen when a mortgagee transfers a promissory note without a written assignment of the mortgage?

Answer 19

generally the mortgage follows the note.

Question 20

If the proceeds from a foreclosure sale are insufficient to satisfy the debt of a mortgage junior to the one being foreclosed, the result is:

Answer 20

The junior mortgagee may sue the mortgagor for the deficiency