Mortgages

Question 1

A borrower is called a…

Answer 1

mortgagor.

Question 2

A lender is called a…

Answer 2

mortgagee.

Question 3

A mortgage transaction involves two documents:

Answer 3

1. The promissory note; and
2. The mortgage.

Question 4

The promissory note is the mortgagor’s….

Answer 4

personal obligation.

Question 5

If the mortgagor quits paying, the mortgagee has the options to…

Answer 5

1. Seek foreclosure; or
2. Sue the mortgagor personally for payment of the note.

Question 6

The mortgage is the agreement that says that….

Answer 6

if the mortgagor quits paying, the land can be sold to pay the mortgagee.

Question 7

A purchase money mortgage is…

Answer 7

an extension of value by a lender who takes a security interest in the very real estate that its loan enables the debtor to acquire as collateral.

Question 8

A mortgage typically must be in writing to statisfy the SoF, this is the…

Answer 8

legal mortgage.

or deed of trust; security interest in land; mortgage deed.

Question 9

A creditor-mortgagee can transfer her interest by…

Answer 9

1. Indorsing the note and delivering it to the transferee, OR
2. Executing a separate document of assignment.

Question 10

In Virginia, an assignment of a mortgage will carry…

Answer 10

the debt with it.

Question 11

If a grantee assumes a mortgage, they are…

Answer 11

personally liable on the morgage note.

Question 12

If a grantee takes property subject to the mortgage, they are…

Answer 12

not agreeing to personal liability & their only recourse is foreclosure.

Question 13

Due-on-sale clauses allow the lender to…

Answer 13

demand full payment of the loan if the mortgagor transfers any interest in the property without the lender’s consent.

Question 14

HYPO: On January 10, Madge took out a $50K mortgage on Blackacre with First Bank. First Bank promptly and properly recorded its interest on January 10. Thereafter, on January 15, Madge sold Blackacre to Buyer. Buyer had no actual knowledge of the lien. Buyer promptly and properly recorded its deed. Does Buyer hold subject to First Bank’s mortgage?

Answer 14

YES.

First Bank recorded first, Buyer has record notice.

Question 15

Suppose that a debtor-mortgagor has defaulted on the loan the mortgagee-creditor must look to the land for satisfaction. How must the mortgagee proceed?

Answer 15

The mortgagee must foreclose by a proper judicial proceeding.

Question 16

What if the foreclosure proceeds from the sale of Blackace are less than the amount owed?

Answer 16

Mortgagee brings a deficiency action against the debtor.

Question 17

What if there are surplus proceeds from sale at foreclosure?

Answer 17

Junior liens ae paid off in order of their priority. Any remaining surplus goes to the debtor.

Question 18

Foreclosure terminates interests…

Answer 18

junior to the mortgage being foreclosured but does not affect senior interests.

Question 19

If a necessary party is not joined in a foreclosure action, then…

Answer 19

their mortgage remains on the land.

Question 20

Equitable redemtion is recognized up until the…

Answer 20

date of dale.

Question 21

May a debtor/mortgagor waive the right to redeem in the mortgage itself?

Answer 21

No, as a public policy rule, this would clog the equity of redemtion & it is not allowed.