Mortgages

Question 1

Mortgages Creation

Answer 1

Conveyance of a security interest in land, intended by the parties be a collateral for the repayment of the debt’

Elements: Debt, Voluntary Lien on Debtor’s Property

MUST BE IN WRITING

Question 2

Equitable Mortgage

Answer 2

Instead of executing a note or mortgage deed for collateral, mortgagor gives deed to mortgagee.

Parol evidence is admissible to show parties intent
If property is sold by bank to BFP, owners only recourse is ti sue creditor for fraud and sale proceeds

Question 3

Parties’ Right Upon Creation of a Mortgage

Answer 3

Unless and UNTIL foreclosure, debtor-mortgagor has: title and right to possess.

Creditor-Mortgagee: has lien, right to look to property in event of default

Question 4

Transferring Interest in a Mortgage

Answer 4

Mortgagee can transfer by ENDORSING NOTE AND DELIVERING IT TO TRANSFEREE OR EXECUTING SEPARATE DOCUMENT FOR ASSIGNMENT.

if note is endorsed and delivered transferee becomes HOLDER IN DUE COURSE and takes note free from any Personal Defenses that could have been raised against original creditor

Question 5

Personal Defenses

Answer 5

lack of consideration, fraud in the inducement, Unconscionability, waiver, estoppel

Question 6

Real Defenses HOLD IN DUE COURSE IS SUBJECT TO (MAD FIFI4)

Answer 6

M
A
Duress
Fraud
In
Factum
Illegality
Incapacity
Infancy
Insolvency

Question 7

Requirements for Holder in Due Course

Answer 7

note must be negotiable, made payable to named mortgagee, original must be endorsed, signed by the named mortgagee, original must be delivered to transferee

transferee must take note in good faith without notice of any illegality AND transferee must pay value for note.

Question 8

Recording Statues for Mortgagees

Answer 8

Liens remain on land, SO LONG AS the mortgage was properly recorded.

Question 9

Liability For Debt when mortgage property is sold

Answer 9

Mortgage Assumed = both owner and buyer (buyer primarily/owner secondarily)

Subject To - Buyer assumes no liability