Mortgages

Question 1

Mortgagor

Answer 1

Borrower

Question 2

Mortgagee

Answer 2

Lender

Question 3

Promissory Note

Answer 3

Legally binding promise to repay the debt

Question 4

Title Theory

Answer 4

Seller maintains title until the mortgage is paid (minority)

Question 5

Lein Theory

Answer 5

Buyer holds the title, Seller holds lien (excess payment from the property sale goes to the mortgagor)

Question 6

Conventional Mortgage

Answer 6

The buyer gets the title and starts to attain equity
Seller gets purchase price for mortgagee
The creditor gets Fee Simple Absolute
When the debt is paid, the mortgage becomes VOID

Question 7

Deed of Trust

Answer 7

Land conveyed to a third party, the trustee holds it for the benefit of the holder of the promissory note

Question 8

Purchase Money Mortgage

Answer 8

Financed by the seller; a buyer receives a deed, and the seller takes a mortgage

Question 9

Equitable Mortgage

Answer 9

Any document that pledges land as security for the debt (option to repurchase, sell, leaseback, or a covenant not to convey)

Question 10

Installment Land Contract

Answer 10

Little to no down payment, but paid in monthly installments. The seller retains the title until the purchase is completed; by default, the buyer loses the land and payments made

Question 11

Prepayment Clause

Answer 11

right to prepay the entire principal

Question 12

Acceleration Clause

Answer 12

immediate repayment of the entire outstanding principal upon default, with the ability for the mortgagee to waive

Question 13

Written Notice

Answer 13

Given with reasonable time to cure; requires actual notice

Question 14

Equity of Redemption

Answer 14

Begins at the time of receipt of written notice (30- 90 days); EOR waivers are automatically VOID and universally unenforced

Question 15

Foreclosure

Answer 15

EOR period has ended; claim over property

Question 16

Strict Foreclosure

Answer 16

(title theory) decree the foreclosing of the right of redemption on a certain date; results in a forfeiture (creditor takes property and cancels debt)

Question 17

Foreclosure by Sale

Answer 17

(lein theory) usually a judicial sale or private where there is a deed of trust; sell the property to satisfy the judgment

Question 18

Statutory Period of Redemption

Answer 18

period after redemption (up to a year) to come up with the sale price and buy the property back (primarily used in farm communities)

Question 19

Transfers Subject to the Mortgage

Answer 19

(Sublease): May only file suit against the original mortgagor if the subsequent mortgagor is in default

Question 20

Assume the Mortgage

Answer 20

(Assignment): promise to pay the promissory note; ability to see both the original and subsequent mortgagor

Question 21

Novation

Answer 21

Agreement to substitute the OG w/ the subsequent mortgagor on both the mortgage and the promissory note