Two different legal positions have developed regarding the lender's rights in property secured by a mortgage. Some states practice the lien theory of mortgage while others follow the title theory. The difference is that:
in lien theory states, the lender has only a monetary claim to the property
A promissory note is
The lender's evidence of a loan - A promissory note establishes the amount of the debt, the terms of repayment and the interest rate. A note serves as the written evidence of a debt.
The clause in a mortgage note that allows the lender to demand immediate payment in full of the remaining balance, if payment of the note is NOT made as contracted, is the
Acceleration clause - Without the acceleration clause, the lender could only sue for each payment as it became due.
In order to be valid, a mortgage or deed of trust must be:
If the note is secured by a mortgage or trust deed, it must say so. Otherwise, it is solely a personal obligation of the borrower.
As security for an obligation, a purchaser pledges real or personal property without surrendering rights or possession. This is commonly known as
Hypothecation
Mortgagee Mann foreclosed on owner Olson's property due to a default, so the property was sold at a sheriff's sale. The proceeds exceeded the indebtedness. In this case, who would receive the excess funds?
: The mortgagor, for repayment of equity
Mr. Dunn owes $35,000.00 on his existing note which is secured by a mortgage, and defaults on the note. As a result, the court-ordered sale only produced $33,000.00 towards the note. Which of the following is MOST correct?
The mortgagee may be entitled up to a $2,000 judgment against Dunn
Bank A holds a lien on a home on which Bank B already had a lien. The lenders subsequently entered into an agreement in which Bank A moved into a first lien position. This is an example of a
Subordination agreement
In order to be valid, a mortgage or deed of trust must be:
� in writing.
� executed by the parties.
� between competent parties
� all of the above.
all of the above.
A subdivision developer obtained a construction loan to build new houses on twenty lots. What type of clause might he require in the security instrument for the construction loan?
� subordination
� partial release
� exculpatory
� safety
: partial release
A mortgage is released by:
� revision
� reconveyance
� quitclaim deed
� satisfaction
satisfaction
When a trust deed is used to pledge real property as security for a loan, the lender is the:
� beneficiary
� trustor
� trustee.
� mortgagee
beneficiary
If an individual defaults on a $100,000 mortgage and only $95,000 is received by the lender as a result of a court ordered sale, which of the following is (are) true?
� The lender must file a $5,000 judgment against the buyer who bought the property.
� Th
The lender may be entitled to a $5,000 judgment against the original borrower
If Stone purchased land from Fowler with the idea of developing it and Fowler took payment in cash and the balance in the form of a note and mortgage, then which of the following clauses would Stone insist on including in the security instrument?
� aliena
subordination
If the lender's security instrument includes the power of sale, then:
� the lender may award himself a deficiency judgment should the property sell at foreclosure for less than the amount owed.
� there is no requirement that junior lien holders be persona
the lender may take title without a foreclosure sale
Owner Smith bought a farm, took out a mortgage on it and then added a tool shed to the farm. Is the tool shed subject to the mortgage lien?
� No, because it is a trade fixture.,
� No, because it was installed after the mortgage note was signed.
� Yes, bec
Yes, because the mortgage lien attaches to all fixtures
In the case of a default on a mortgage loan, what can the creditor do to the debtor?
� Foreclose on the property
� Take the property by adverse possession
� Obtain judgment
� Record a lien
Foreclose on the property
Two different legal positions have developed regarding the lender's rights in property secured by a mortgage. Some states practice the lien theory of mortgage while others follow the title theory. The difference is that:
� in lien theory states, the borro
lender has only a monetary claim to the property.
Your answer: in lien theory states, the lender has only a monetary claim to the property.
Correct
The clause in a mortgage that prevents the transfer of title to the lender if the loan is satisfied is known as:
� defeasance
� release
� satisfaction
� alienation
defeasance
The clause in a mortgage used by lenders to prevent the assumption of a loan is known as:
� acceleration clause
� alienation clause
� defeasance clause
� release clause
alienation clause
A promissory note is:
� the lenders security for a loan made to finance the purchase of property
� one guaranteed or insured by a government agency
� the lender's evidence of a loan
� automatically secured by a mortgage when signed by the property owner
the lender's evidence of a loan
Which clause in a security instrument would allow a first mortgage to be refinanced WITHOUT losing priority?
� alienation
� subordination
� acceleration
� defeasance
subordination
Provisions for the defeat of the mortgage are found in the:
� alienation clause.
� acceleration clause.
� foreclosure clause.
� defeasance clause.
defeasance clause
By including an exculpatory clause in a mortgage contract, the lender:
� waives his right to escalate the interest rate.
� releases the borrower from personal liability.
� agrees to permit an assumption to a qualified buyer.
� grants the borrower immunity
releases the borrower from personal liability.
The right that enables the mortgagor to regain his property after foreclosure is known as:
� repossession
� recovery
� redemption
� rescission
redemption
A state in which title to real property rests with the lender is said to recognize which type of mortgage theory?
� community property
� intermediate
� lien
� title
title
The clause in a mortgage note that allows the lender to demand immediate payment in full of the remaining balance, if payment of the note is NOT made as contracted, is the:
� alienation clause.
� acceleration clause.
� foreclosure clause.
� amortization c
acceleration clause.
Mason and Gilbert sign a promissory note jointly and severally to borrow $100,000 to finance the purchase of property they will own equally. If Mason defaults, then:
� Gilbert is responsible for the entire debt
� Mason must deed his one-half interest to G
Gilbert is responsible for the entire debt