Mortgages

Question 1

Mortgagor

Answer 1

Borrower

Question 2

Mortgagee

Answer 2

Bank/lender

Question 3

Lien theory

Answer 3

• mortgagee receives a lien,
• and the mortgagor retains legal and equi- table title and possession to the mortgaged real property,
• unless and until foreclosure occurs

Question 4

Title Theory

Answer 4

• mortgagee receives legal title to the mortgaged real property
• and has a right to take possession of
• and to collect rents and pro ts from the property

Question 5

Judicial Foreclosure requires:

Answer 5

1. Be public
2. Be properly noticed
3. Be conducted in a reasoanble manner; and
4. Result in a “fair” sale price

Question 6

Redemption

Answer 6

At any time after default but before foreclosure, mortgagor has the right to redeem the property by paying the debt due

Right to redeem may not be waived

Question 7

Transfer subject to the mortgage

Answer 7

• Mortgagee may foreclose and force property to be sold
• Transferee does not have personal liability for the debt

Question 8

Transferee assumes the mortgage

Answer 8

• Mortgagee may foreclose and force the property to be sold
• Transferee has personal liablity and can be held liable for any deficiency

Question 9

mortgage is typically evidenced by two documents

Answer 9

(1) a mortgage deed; and
(2) a promissory note (mortgage note).

Question 10

Mortage deed elements

Answer 10

(1) the identity of the parties;
(2) a description of the property; and
(3) the intent to create a security interest.

Question 11

intermediate theory

Answer 11

mortgagor retains legal title until default occurs. After default, legal title and possession pass to the mortgagee, who may then begin to collect rents and pro ts

Question 12

Who is responsible to pay principal on mortgage

Answer 12

person holding a remainder in mortgaged property

Question 13

Life tenant

Answer 13

Has duty to pay interest on mortgage

Question 14

What is life tenant’s duty limited to?

Answer 14

(1) rents and pro ts derived from a third person in possession of the property; or
(2) the reasonable rental value of the premises, if the life tenant remains in possession of the property.

Question 15

Mortgagee’s remedies if mortgagor/life tenant commits waste

Answer 15

1. Foreclosure
2. Injunction prohibiting future waste or requiring correction of waste already committed
3. Recovery of damages