Mortgages and security devices

Question 1

Mortgages

Answer 1

document that indicates the existence of a debt and given with the notice

mortgagor is the debtor. mortgagee is usually a bank

Question 2

Installment land contract

Answer 2

when the buyer contractually agrees to make installment payments and the seller agrees to convey title to the buyer once the land is paid in full

forfeiture clauses are enforceable

Question 3

Absolute deeds as security

Answer 3

basically equitable mortgage, always treated as mortgages

Two kinds: (1) sale or lease with the option to repurchase; (2) absolute deed with a separate promise to re-convey

Question 4

Sale or lease with the option to repurchase

Answer 4

landowner sells land to someone then leases it back and retains an option to repurchase it at the end of the lease

Question 5

Absolute deed with a separate promise to re-convey

Answer 5

landowner borrows money from someone and gives a deed for the land in exchange for promise that she will re-convey the land to him if the debt is paid

Question 6

Deed of trust

Answer 6

debtor (trustor) gives a deed of trust to the trustee (third party who is usually affiliated with the lender). if default occurs, lender tells trustee to proceed with foreclosure by selling the deed of trust

Question 7

Novation

Answer 7

when the initial mortgagor, new transferee, and the mortgagee all agree that mortgagor is no longer liable and the transferee assumes all of his duties. only the new transferee is liable

Question 8

Due-on-sale clause

Answer 8

if the mortgagor transfers the land without the mortgagee’s consent. the full balance under the loan is due immediately. these are enforceable

Question 9

Lien theory state

Answer 9

mortgagee only has a lien (security interest) and mortgagor is deemed the owner until foreclosure. mortgagee may not take possession until foreclosure

*majority rule and MI

Question 10

Title theory state

Answer 10

title is in the mortgagee until the mortgage is satisfied or foreclosed. mortgagee is entitled to possession upon demand at any time (i.e., as soon as default occurs)

*minority rule

Question 11

Equity right of redemption

Answer 11

at any point prior to foreclosure sale, debtor can redeem the property by paying everything due under the mortgage agreement (“catch up”). this cannot be waived in mortgage or deed of trust

acceleration clauses are enforceable. buyer must pay the full amount of the balance

Question 12

Statutory right of redemption

Answer 12

Allows mortgagor to get property back after foreclosure sale by paying the full purchase price within (usually) 6 months of foreclosure

*MI rule

Question 13

Foreclosure by advertisement

Answer 13

(1) there must be a default on the mortgage loan and power of sale clause;
(2) mortgagee must publish notice of foreclosure by sale for four consecutive weeks, at least once each week, in a newspaper published in the county where premises is situated;
(3) within 15 days after first publication, mortgagee must post a copy in a conspicuous place upon part of the premises; and
(4) public foreclosure sale must be held on the set date and purchaser must record deed within 20 days of sale