Security Interests in Land

Question 1

Mortgages will automatically follow a properly transferred __________, unless the mortgagee-transferor expressly reserves the right of the mortgage.

Answer 1

note

Question 2

How can a mortgage note be transferred?

Answer 2

1) by indorsing it and delivering it to the transferee; or 2) by a separate document of assignment.

Question 3

Assumption Agreement

Answer 3

a grantee who signs an assumption agreement becomes primarily liable to the lender for the mortgage payments, while the original mortgagor becomes secondarily liable for the payments as a surety.

Question 4

Due on Sale Clause

Answer 4

a clause in most mortgages which states that if the mortgagor attempts to transfer any interest in the property without the lender’s consent, the lender can demand full payment of the loan.

Question 5

After a default on a mortgage, what must a lender do?

Answer 5

The lender must evaluate a mortgagor’s application for an alternative to foreclosure, such as a modification of the loan.

Question 6

When a mortgagor defaults on his mortgage, the mortgagee can ___________ on the mortgage.

Answer 6

foreclose

Question 7

When a mortgagor defaults on his mortgage, the mortgagee can ___________ on the mortgage.

Answer 7

foreclose

Question 8

How is a mortgage foreclosed on?

Answer 8

Foreclosure by sale, which is usually conducted by auction.

Question 9

How is a mortgage foreclosed on?

Answer 9

Foreclosure by sale, which is usually conducted by auction.

Question 10

Redemption

Answer 10

at any time prior to the foreclosure sale, the mortgagor may redeem the property by paying the amount due.

Question 11

Acceleration Clause

Answer 11

prior to a foreclosure sale, the mortgagor may redeem the property by paying the amount due. If there is an acceleration clause, the mortgagor must pay off the entire loan.

Question 12

Foreclosure does not destroy any interests _________ to the interest being foreclosed, but generally destroys all __________ interests.

Answer 12

senior; junior

Question 13

Failure to include a junior interest holder in a foreclosure action results in ____________ of the party’s interest.

Answer 13

preservation

Question 14

Subordination Agreement

Answer 14

an agreement between a senior and junior interest in property that the senior interest will subordinate itself to the junior interest. This does not mean they are switching places.

Question 15

Purchase Money Mortgage

Answer 15

a mortgage given in exchange for funds used to purchase the property.

Question 16

Purchase money mortgages have priority over what mortgages/liens/claims?

Answer 16

all mortgages/liens,claims which arose prior to the mortgagor’s acquisition of title under the PMM.

Question 17

What is the first thing that proceeds of a foreclosure sale applied to?

Answer 17

Expenses of the sale, attorney’s fees, and court costs.

Question 18

What can a mortgagee do if the proceeds of the foreclosure sale are insufficient to satisfy the mortgage debt?

Answer 18

The mortgagee can bring a deficiency action against the mortgagor.

Question 19

Where a purchaser of land assumes a mortgage on the land, is the original owner of the land absolved from having to pay the mortgage?

Answer 19

no. The original mortgagor is secondarily liable for the mortgage as a surety.