Property

Question 1

What is a mortgage?

Answer 1

A promissory note representing a loan on property that a buyer takes on a home that they cannot afford to purchase outright.

Question 2

Mortgage borrower

Answer 2

Mortgagor

Question 3

Mortgage lender

Answer 3

Mortgagee

Question 4

Mortgage transaction has two documents:

Answer 4

Promissory note & mortgage

Question 5

Promissory note

Answer 5

Represents the mortgagor’s personal obligation to pay the debt

Question 6

Mortgage

Answer 6

Agreement that states that if the mortgagor quits paying, the land can be sold to pay the mortgagee

Question 7

Purchase money mortgage

Answer 7

Taking a security interest in the home you hope to purchase in order to fund said purchase

Question 8

Non purchase money mortgage

Answer 8

Security interest in the home does not enable mortgagors to acquire the home.

Question 9

T/F: The Mortgagee may transfer their interest

Answer 9

True

Question 10

The Mortgagee may transfer their interest by:

Answer 10

Endorsing the note and delivering it to the transferee OR Executing a separate document of assignment

Question 11

Buyer assumes the mortgage

Answer 11

The buyer agrees to be personally liable on the mortgage note

Question 12

Buyer takes the property subject to the mortgage

Answer 12

Buyer is not personally liable - they only recourse for nonpayment is foreclosure

Question 13

General rule when the mortgagor transfers title to the property

Answer 13

The grantee takes the property subject to the mortgage and will not be personally liable

Question 14

T/F: Recording statutes apply to liens as well as deeds

Answer 14

True

Question 15

T/F: If the underlying loan is unenforceable, so is the mortgage

Answer 15

True

Question 16

Defenses to enforcement of the mortgage include:

Answer 16

Duress, Mistake, Fraud, and other contract defenses

Question 17

Dodd Frank Act

Answer 17

Terms of the mortgage must be understandable

Question 18

Acts that discharge the mortgage

Answer 18

Full payment of the debt, merger of the mortgagor and mortgagee’s interest, a deed in lieu of foreclosure

Question 19

Foreclosure

Answer 19

The process by which the mortgaged property is sold at auction and the mortgagor’s interest in it is terminated

Question 20

Lien theory states

Answer 20

Mortgage = lien

Question 21

Title theory states

Answer 21

Mortgage holds legal title until the mortgage is fully paid

Question 22

Redemption

Answer 22

Mortgagor’s ability to recover property once they are in default

Question 23

Redemption in equity

Answer 23

Allows the mortgagor to redeem the property before the foreclosure sale

Question 24

Statutory right of redemption

Answer 24

Allows the mortgagor to redeem for a period of time after the foreclosure sale

Question 25

The priority of a mortgage depends on:

Answer 25

When it was placed on the property - first in time, first in right

Question 26

Acceleration Clause

Answer 26

If the debtor defaults, they must pay the full balance due in order to exercise their right of redemption.

Question 27

Clogging The Equity of Redemption

Answer 27

The right to redeem is attempted to be waived within the mortgage

Question 28

In order to abandon an easement:

Answer 28

There must be an intent to abandon and an act of destruction by the easement holder

Question 29

Deficiency

Answer 29

Difference between the mortgage owed and the foreclosure cost

Question 30

Shelter Doctrine

Answer 30

BFP status is conferred to the nonBFG grantee

Question 31

Time is of the essence in a real estate contract when:

Answer 31

1. The contract states that time is of the essence 2. The circumstances indicate that the parties intended for time to be of the essence 3. Either party provides notice that time is of the essence

Question 32

Doctrine of Equitable Conversion

Answer 32

Buyer has equitable title in the property. Seller has legal title.