mortgages Flashcards
mortgage
a security interest in land that serves as collateral for the repayment of a loan; must be in writing to satisfy SoF
lien theory (majority)
mortgagor has title and the right to possession absent foreclosure; mortgagee has a lien, conferring a right to take action for ownership of the land if the mortgagor defaults on the loan
title theory (minority)
mortgagee has title to the property during loan term, not mortgagor-borrower
intermediate theory (minority)
mortgagor has title and right to possession until default occurs per the mortgage; after default mortgagee has title and right to possession
equitable mortgage
debtor gives creditor a deed to his land as collateral for the debt
mortgagor
debtor/borrower/landowner
mortgagee
creditor
acceleration clauses
terms in loan agreements that require mortgagor to pay off full loan immediately if certain conditions are met, e.g., if mortgagor misses too many payments
mortgagor transfer
where mortgagor sells property, mortgage remains on the land; mortgagor remains liable to mortgagee for the loan
how mortgagee can transfer interest
1) endorsing mortgage note and delivering to transferee
2) executing a separate assignment of the mortgage interest
holder in due course
takes a mortgage note free of any personal defenses mortgagor could have raised against original mortgagee
requirements for holder in due course status
1) negotiable note payable to named mortgagee
2) indorsed
3) delivered
4) good faith and value paid
redemption in equity
at any time prior to a judicial foreclosure sale, mortgagor can redeem the property by paying the amount due
deed in lieu of foreclosure
to avoid foreclosure, mortgagor can agree to give mortgagee deed to property; such transactions will be valid as long as they are fair and reasonable
mortgagee possession
lien theory = no right to possess before foreclosure
title theory = right to possess at any time upon demand
intermediate theory = right to possess upon default
