Mortgages

Question 1

Purchase Money Mortgage

Answer 1

A purchase money mortgage is an extension of value by a lender who takes a security interest in the very real estate that its loan enables the debtor to purchase. A purchase money mortgage takes priority over earlier mortgages, even if they were recorded.

Question 2

Transfer of Mortgage

Answer 2

A mortgagee can freely transfer their security interest; the mortgage follows.

If a mortgagor transfers property, the buyer either assumes the mortgage or takes the property subject to the mortgage. If the buyer assumes the mortgage, both the buyer and the original mortgagor remain personally liable. If the buyer takes subject to the mortgage, only the original mortgagor is personally liable.

Question 3

Priority

Answer 3

As a creditor, you must record; without recording you have no priority. Priority is determined by the first-in-time, first-in-right norm.

Question 4

Foreclosure

Answer 4

A foreclosure does not impact senior interests. Junior liens are paid off in order of priority, and any remaining surplus goes to the debtor. If there is a deficiency, the lienholder can proceed against the debtor personally. the Failure to include a necessary party in a foreclosure proceeding preserves that party’s mortgage on the land regardless of priority.

Question 5

Equitable Redemption

Answer 5

Any time prior to the foreclosure sale, the debtor has the right to redeem the land by freeing it of the mortgage. This right cannot be waived. If there is no acceleration clause, this can be done by paying off the debt; if there is an acceleration clause, this is done by paying the full balance.

Question 6

Equitable Redemption

Answer 6

Any time prior to the foreclosure sale, the debtor has the right to redeem the land by freeing it of the mortgage. This right cannot be waived. If there is no acceleration clause, this can be done by paying off the debt; if there is an acceleration clause, this is done by paying the full balance.