NY Mortgages Flashcards
What is a mortgage? Define it.
Intended by the parties to be security for the payment of money or doing of a prescribed act. The debt itself is usually represented by a promissory note.
In New York, does the creditor have title for the mortgaged land?
No, in New York the creditor has a lien upon the land. Title and possession remain with the borrower.
Are mortgages subject to the statute of frauds?
Yes, to be enforceable, they must be in writing and signed.
What is an equitable mortgage? What is it created?
An equitable mortgage occurs when a deed conveying real property looks like it was intended to create a mortgage, but fails for some legal reason. In the absence of a proper written instrument, a borrower may prove by parole evidence that there was an intention to create a mortgage.
What obligations may mortgage secure?
A mortgage may secure any existing monetary obligation or obligation capable of being reduced to a monetary equivalent. This includes: 1. Pre-existing debts, and 2. Debts of someone other than the mortgagor, and 3. to secure advances made in construction loan agreements.
What types of property interests may be mortgaged?
Any TRANSFERABLE interest in REAL property may be mortgaged. E.g., a fee simple, a life estate, and interest of a spouse in a tenancy by the entirety, or a tenancy for a term.
Under New York law, when is usury a defense available from mortgagor?
Where a mortgagor is not a CORPORATION, usury is a defense available against actions for both principal and interest. Right bank is committing usury, only interest is forfeited, not principal. The defense is personal to the mortgagor, not transferable.
What right does the mortgagee have to the land?
The mortgagee merely has a lien. She is not entitled to possession without consent of the mortgagor.
What right does the mortgagor have to the land?
The mortgagor has title to the land and right to possession until foreclosure. The mortgagor may not commit waste or impair the value of the property securing the mortgage.
What is the relationship between the priority of a mortgagee, recording, and a subsequent purchaser?
Notice of the mortgage is necessary to bind a recording purchaser of property. The mortgagee must record or risk losing her lien if an assignee of property records.
How do you affect a transfer of the mortgage if you are a mortgagee (Creditor)?
The transfer of a mortgage and note may be affected by delivery. A mortgage is collateral to the debt, so it always follows the debt. You cannot assigned a mortgage without that. Until the mortgagor receives notice of assignment of the note and mortgage, payment is valid when made to the mortgagee rather than the assignee.
Transfers by mortgagor: how does a transfer subject to mortgage work?
A mortgaged property is transferred “subject to mortgage,” the property becomes the primary source for payment of the debt but the original mortgagor continues to be libel on the bond. If the mortgagee and the transferee modify the mortgage obligation, the original mortgagor is discharged from his suretyship.
Transfers by mortgagor: how does a transferee assume a mortgage? What happens?
If property is transferred to one who ASSUMES the mortgage, that transferee becomes the PRIMARY OBLIGOR, the original mortgagor is only liable secondarily. Assumption requires a clear written statement of the amount owed and the assumption. It does not relieve the original mortgagor of his obligation on the bond.
What is the difference between the transfer of mortgage SUBJECT TO a mortgage and ASSUMING a mortgage?
What a transferee takes SUBJECT TO mortgage, if the transferor defaults on the obligations secured by mortgage, the mortgagee may foreclose on the transferee’s property but may not hold the transferee personally liable.
On the other hand, if the transferee ASSUMES the mortgage and there is a default, the mortgagee not only can foreclose on the transferee’s property, but can also seek payment from transferee personally.
When someone dies, how does the property with a mortgage pass? I.e., how does the person receiving the property receive it?
The beneficiary takes the property SUBJECT TO the mortgage. Upon default, the creditors 1st recource is against the property, after which he may proceed against the decedent’s estate. The beneficiary is not personally liable for default.
