Mortgages - Equitable Mortgages

Question 1

An equitable mortgage is created by

Answer 1

the conveyance of an absolute deed as security for a loan, along with a promise by the grantee to reconvey the deed to the grantor once the loan is paid off.

Because the lender’s interest is a mortgage on the property rather than outright ownership of it, his only remedy following the owner’s default is foreclosure (as opposed to eviction) of the property pursuant to the equitable mortgage

Question 2

What are the three main alternatives to mortgages as security devices?

Answer 2

Deed of trust.

Installment land contract.

Absolute deed.

Question 3

What is a deed of trust?

Answer 3

Deed of Trust. A deed of trust operates like a mortgage, but involves three parties:

1. The borrower;
2. The lender;

AND

3. A third-party trustee who holds title of the property until the loan is paid off.

Question 4

What is an Installment Land Contract.

Answer 4

The seller finances the purchase in an installment land contract retaining title until the buyer makes the final payment on the installment plan.

Question 5

What is an Absolute Deed.

Answer 5

An absolute deed is an instrument used by the borrower to transfer the deed to the property instead of conveying a security interest in exchange for a loan.