Deck 36: Mortgages

Question 1

What satisfies the lender's need for a security interest?

A) Mortgage
B) Mortgage deed
C) All of the above
D) None of the above

Answer 1

All of the above

Question 2

What term describes a written promise by the borrower to pay a sum of money to the lender?

A) Affirmation
B) Promissory note
C) Verification
D) Nudum pactum

Answer 2

Promissory note

Question 3

What is an example of collateral?

A) Condominium
B) Beach house
C) Ranch
D) All of the above

Answer 3

All of the above

Question 4

What clause in the mortgage provides that the mortgage deed shall be void on payment of the obligation?

A) Malfeasance
B) Misfeasance
C) Defeasance
D) Nonfeasance

Question 5

What term describes a legal theory relating to mortgages?

A) Common law
B) Res
C) Chattels
D) Bequest

Question 6

What is another name of a lien theory?

A) Unbiased theory
B) Equitable theory
C) Fair theory
D) Impartial theory

Question 7

What term describes a mortgage with an interest rate that fluctuates according to changes in an index to which it is connected?

A) Variable-rate mortgage
B) Flexible-rate mortgage
C) Adjustable rate mortgage
D) All of the above

Question 8

What term describes a mortgage with an interest rate that does not change during the life of the mortgage?

A) Fixed-rate mortgage
B) Permanent rate mortgage
C) Stable rate mortgage
D) Steady rate mortgage

Question 9

What is a characteristic of a deed of trust?

A) Title is conveyed to a trustee
B) Trustee holds title as security for the debt
C) Use of non-judicial foreclosures
D) All of the above

Question 10

What state uses a deed of trust?

A) California
B) Indiana
C) Hawaii
D) Florida

Question 11

What does the word "foreclose" mean?

A) Shut out
B) Bar
C) Terminate
D) All of the above

Question 12

What clause in a mortgage causes the entire balance of the loan to become due when a default occurs?

A) Addendum
B) Acceleration
C) Habendum
D) Exordium

Question 13

What term describes the right to redeem the property any time before the completion of a foreclosure?

A) Equity of redemption
B) Lis pendens
C) Estoppel
D) Chose in action

Question 14

What legal documents grant the right of redemption to mortgagors?

A) State constitutions
B) Statures
C) Universal Declaration of Human Rights
D) U.S. Constitution

Question 15

What happens when a mortgagor sells real property that has a mortgage?

A) Only the equity of redemption is sold
B) The original mortgagor must still pay the mortgagee
C) All of the above
D) None of the above

Question 16

What term describes a situation when a mortgagor sells the premises "subject to the mortgage that the grantee assumes and agrees to pay"?

A) Mortgage take-over
B) Mortgage assumption
C) All of the above
D) None of the above

Question 17

What is a junior mortgage?

A) Second mortgage
B) Mortgage on the equity of redemption
C) Mortgage subject to a prior mortgage
D) All of the above

Question 18

What is involved in refinancing?

A) Extinguishing a debt obligation
B) Replacing a debt obligation with a new debt that has different terms
C) All of the above
D) None of the above

Question 19

What document does the mortgagor sign when a mortgage debt is paid?

A) Mortgage termination
B) Mortgage discharge
C) Mortgage fulfillment
D) Mortgage release

Question 20

What document shows that specified parcels of property are released from the encumbrance?

A) Partial release of mortgage
B) Limited release of mortgage
C) Incomplete release of mortgage
D) All of the above

Question 21

A mortgage is a conveyance of real property for the purpose of securing a debt.

Question 22

Traditionally, the mortgagor would lose title to the property if the debt was not paid exactly when it was due.

Question 23

Under the common law theory, a mortgagee's title could become a fee simple absolute if the mortgagor missed the payment by one day.

Question 24

Under the lien theory, the mortgagee retains legal title to the premises.

Question 25

A permanent rate mortgage is a mortgage with an interest rate that does not change during the life of the mortgage.

Question 26

Under a reverse mortgage, a borrower borrows money to lease a house.

Question 27

In some states, a deed of trust is used as an alternative to mortgage.

Question 28

California and Colorado are deed of trust states.

Question 29

The mortgagee has a right to foreclose when the mortgagor defaults on the payment of the debt.

Question 30

All states allow deficiency judgments.

Question 31

In some states, the mortgagor has a statutory right to redeem the property after a foreclosure sale.

Question 32

In all states, time for the mortgagor's right of redemption is two years after the foreclosure sale.

Question 33

When the new buyer takes the property subject to the mortgagee's rights, only the equity of redemption is sold.

Question 34

Banks, who are mortgagees, never put "due on sale" clauses in their mortgages.

Question 35

If a first mortgagee forecloses, the second mortgagee's resort is to pay the mortgagor's debt and then foreclose also.

Question 36

"Amortization" is a Middle English word, and its original meaning is "to reduce. "

Question 37

The mortgage discharge is recorded at the registry of deeds.

Question 38

When a mortgage debt is paid, the mortgagor signs a document stating that the mortgage debt is satisfied.

Question 39

A security interest is also known as ________.

Question 40

A clause in the mortgage providing that the mortgage deed shall be void on payment of the obligation is called a(n) ________ clause.

Question 41

A mortgage with low, fixed payments during the life of the loan, ending with one large final payment is called a(n) ________ mortgage.

Question 42

In some states, a(n) ________ of trust is used as an alternative to a mortgage.

Question 43

A judgment for the amount remaining due on the mortgage after a foreclosure sale is called a(n) ________ judgment.

Question 44

The mortgagor's right to redeem the property before the completion of a foreclosure proceeding by paying the amount of the debt is called the ________ redemption.

Question 45

In a mortgage take-over, the original mortgagor is still liable on the debt and becomes a(n) ________ on the loan.

Question 46

Mortgagees can transfer their interests in mortgages to other parties by the use of a mortgage ________.

Question 47

In lending, ________ shows how the loan's balance is reduced until it is paid off.

Question 48

To show that specified parcels of real estate are released from the encumbrance, a(n) ________ release of mortgage is used.

Question 49

Match the terms with their descriptions:

-Mortgagor

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 50

Match the terms with their descriptions:

-Deed of release

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 51

Match the terms with their descriptions:

-Power of sale

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 52

Match the terms with their descriptions:

-Deed of trust

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 53

Match the terms with their descriptions:

-Graduated-payment mortgage

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 54

Match the terms with their descriptions:

-Lien theory

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 55

Match the terms with their descriptions:

-Junior mortgage

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 56

Match the terms with their descriptions:

-Right of redemption

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 57

Match the terms with their descriptions:

-Acceleration clause

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 58

Match the terms with their descriptions:

-Mortgage assumption

A) Agreement by a new owner of real property to pay the former owner's mortgage
B) Alternative to a mortgage
C) Clause in a mortgage causing the entire balance of the loan to become due when a default occurs
D) Mortgage subject to a prior mortgage
E) Under this theory, a mortgage is viewed as a lien against the property
F) Mortgage under which payments increase gradually over the life of the loan
G) Statutory right to redeem the property even after a foreclosure sale
H) Deed releasing property from an encumbrance
I) Person borrowing money and giving a mortgage to the lender
J) Clause in a mortgage allowing the mortgagee to hold a foreclosure sale without involving the court when a default occurs

Question 59

Discuss two prevailing mortgage theories.

Question 60

Define a mortgage. Identify common types of mortgages.

Question 61

Define a deed of trust and identify its main characteristics.

Question 62

Sarah and Julia are looking for mortgages. Sarah wants a mortgage with low payments (at least, in the beginning of the life of the loan). Julia wants her mortgage payments to increase steadily. Discuss what types of mortgages are suitable for Sarah and Julia.

Question 63

George defaulted on his mortgage payments, and the bank initiated a mortgage foreclosure. What can George do to take his house back?