Mortgages Flashcards
Which of the following will preclude the mortgagee’s right to foreclose upon the mortgagors default?
The mortgagees acceptance of a deed in lieu of foreclosure.
May a mortgagee be foreclosed by judicial sale?
Yes, in all jurisdictions.
Definition:
Under either title theory or intermediate theory, the mortgagee may take possession of the mortgaged property upon the mortagor’s default.
A purchase money mortgage (PMM), whether recorded or not, generally will have priority over __________.
A prior non-PMM against the same mortgagor. A PMM is a mortgage given to (i) the vendor of the property as a part of the purchase price, or (ii) a third party who lends funds to allow the buyer to purchase the property.
Statutory redemption is the right of a mortgagor to
recover the land by paing the foreclosure sale price AFTER the sale has occurred.
May a mortgagee validly transfer the note without the mortgage?
Yes but the mortgage will automatically follow the note.
When is a lender entitled to a deficiency judgment?
When the proceeds of a foreclosure sale do not satisfy the mortgage debt.
The priority of the proceeds from a foreclosure sale is as follows:
- Expenses of the Sale, Attorney’s Fees, Court Costs; 2. The principal and accrued interest on the foreclosing party’s loan; 3) Any junior lienors or other junior interests in the order of their priority; 4) The Mortgagor
Must a junior mortgagee be named as a party to a senior mortgagee’s foreclosure action?
Yes because it has the right to pay off the senior mortgage to avoid being wiped out by foreclosure.
If the proceeds from a foreclosure sale are insufficient to satisfy the debt of a mortgage junior to the one being foreclosed, the result is:
The junior mortgagee may sue the mortgagor for deficiency.
When allocating proceeds from a mortgage foreclosure sale, which of the following receives payment last?
The mortgagor.
May the foreclosing lender bid on the foreclosure sale?
Yes. Most def. Mos Def?
Mortgages on the property that are __________ to a mortgage being foreclosed are __________ by the foreclosure if they are made parties to the foreclosure proceeding.
Junior; extinguished.
Foreclosure destroys interests (e.g. liens, mortgages, leases, easements) junior to the mortgage being foreclosed, but does not affect any interest senior to the mortgage being foreclosed.
A clause that requires full payment of a mortgage debt if the mortgagor transfers her interest without the lender’s consent (a “due-on-sale” clause) ________
Is enforceable by an institutional mortgage lender.
Power of Sale provisions generally apply to what type of security interest in land?
Deeds of Trust
A purchase money mortgage (PMM), whether recorded or not, generally will have priority over:
A prior non-PMM against the same mortgagor. A PMM is a mortgage given to (i) the vendor of the property as a part of the purchase price, or (ii) a third party who lends funds to allow the buyer to purchase the property. Thus, a PMM has priority over prior non-PMMs, even if those other mortgages or liens are recorded first.
Must a junior mortgagee be named as a party to a senior mortgagee’s foreclosure action?
Yes, because it has the right to pay off the senior mortgage to avoid being wiped out by foreclosure.
When may a mortgagee take possession of the mortgaged property?
On default, in a Title Theory state.
What is the purpose/operation of a Due-On-Sale clause?
They exist to benefit the lender, and are designed to (i) protect the lender from the mortgagor’s sale to a poor credit risk or to a person likely to commit waste; and (ii) allow the lender to raise the interest rate or charge an assumption fee when the property is sold.
What is a Deed of Trust?
A deed of trust is a security interest in land by which the debtor (trustor) transfers title to the land to a third party (the trustee), such as the lender’s lawyer or a title insurance company, acting on behalf of the lender (the beneficiary).
May a mortgagee validly transfer its mortgage interest?
Yes, if the right to enforce the promissory note passes to the transferee.
If a mortgagor conveys mortgaged property, when does the grantee become primarily liable to the lender?
If the grantee assumes the mortgage.
May the vendor of an installment land contract containing a forefeiture clause reinstate strict performance once she has waived it?
Yes, by giving the purchaser notice and reasonable time to catch up on payments.
What generally occurs when a mortgagee transfers a promissory note without a written assignment of the mortgage?
The mortgage follows the note
For an institutional mortgagor, what is the effect of a due-on-sale clause when a mortgagor transfers her interest without the lender’s consent?
The lender may demand the debtor pay the remaining debt in full.
If a grantor transfers a deed in exchange for case, and the grantee promises to return the land when the case is repaid, a court will likely treat the transaction as:
An Equitable Mortgage
When a mortgagee transfers a promissory note, which of the following is required for the transferee to become a holder in due course?
The note must be payable to bearer or to the order of the named payee.
How is the priority of a mortgage generally determined?
By the order in which it was placed on the property.
If a debtor deeds land to her creditor in exchange for cash, may a court treat the conveyance as a security interest?
Yes, if the creditor promised to return the land when the cash is repaid in full.
As between two mortgages, what is the effect on the junior mortgage when the mortgagor accepts an advance of funds from the senior mortgagee?
The junior mortagee is given priority over the advance if the advance was optional.
May a mortgagee validly transfer the note without the mortgage?
Yes, but the mortgage will automatically follow the note.
__________ is the right of a mortgagor to free the land of the mortgage by paying the amount due, plus interest, at any time BEFORE the foreclosure sale.
Equitable Redemption
__________ is the right of a mortgagor to recover the land by paying the foreclosure sale price AFTER the foreclosure sale has occurred.
Statutory Redemption
What does it mean for a grantee to assume a mortgage?
The grantee becomes primarily liable to the lender.
What is a result of a mortgagor conveying land on which a mortgage was properly recorded?
The mortgage remains on the land.
A __________ purchase money mortgage usually has priority over a __________ purchase money mortgage.
Vendor’s; third-party lender’s.
