Deck 9: Mortgages

Question 1

A promissory note is negotiable; what is the importance of the negotiability?

Answer 1

The purchasers of real property often purchase the property by paying some amount in cash and the balance is borrowed from some other financial source. The balance due is borrowed from a lender and is paid over a period of time. However, some type of assurance needs to be given to the lender, so as to minimize the risk of not getting back the money.
A promissory note is a written instrument which is a promise in writing to pay a specified amount of money, at a specified time or is paid on demand, to the person whose name has been mentioned in the instrument. These notes are negotiable. This means promissory notes can be easily transferred from one person to another i.e. from the payee to another party. This makes the transfer of the instrument easy.
A negotiable instrument means it is capable of being transferred by endorsement or delivery. Endorsement of these negotiable instruments is a common practice of all lending institutions where the promissory notes are bought and sold.

Question 2

What is an endorsement?

Answer 2

The purchasers of real property often purchase the property by paying some amount in cash and the balance is borrowed from some other financial source. The balance due is borrowed from a lender and is paid over a period of time. However, some type of assurance needs to be given to the lender, so as to minimize the risk of not getting back the money.
A promissory note is a written instrument which is a promise in writing to pay a specified amount of money, at a specified time or is paid on demand, to the person whose name has been mentioned in the instrument. These notes are negotiable. This means promissory notes can be easily transferred from one person to another i.e. from the payee to another party. This makes the transfer of the instrument easy.
A negotiable instrument means it is capable of being transferred by endorsement or delivery. Endorsement of these negotiable instruments is a common practice of all lending institutions where the promissory notes are bought and sold. Endorsement is the act done by the payee of the negotiable instrument who transfers the promissory note, by writing the name of the endorsee at the back of the instrument. Endorsement is like assignment or transfer of interest of the endorser to the endorsee. Thus, it is a direction that states the money is to be paid to the holder of the note. Such endorsements are normally printed on the backside of the promissory note or is separately attached to such notes.

Question 3

How many mortgages can be obtained on a parcel of real property?

Answer 3

The purchasers of real property often purchase the property by paying some amount in cash and the balance is borrowed from some other financial source. The balance due is borrowed from a lender and is paid over a period of time. However, some type of assurance needs to be given to the lender, so as to minimize the risk of not getting back the money.
A mortgage is an interest in land which is created with the help of a written instrument, by providing a security for the performance of a duty or for payment of a debt on time. It is like a collateral which is created for undertaking a loan to purchase a real property. More than one mortgage over a single parcel of property can be created. This type of mortgage is known as second mortgage loan. Unless expressly prohibited under the terms of the mortgage, a borrower can create two or more mortgages on a single piece of property. Therefore, a borrower can mortgage a property as many times the lender is ready to take security interest in the property.
It is to be noted that the lender making the second mortgage is exposed to certain risk. If the first mortgage lender goes into default and is barred, the second mortgage will also be terminated at the foreclosure sale.

Question 4

What is the difference between acquiring real property subject to a mortgage and assuming a mortgage?

Question 5

What risk does a second mortgage face?

Question 6

What is an estoppel certificate, and why is it important?

Question 7

How does bankruptcy affect the foreclosure process?

Question 8

What is the difference between a judicial foreclosure and a foreclosure by advertisement?

Question 9

Why is a waiver important in a default action?

Question 10

What is a trustee?

Question 11

List the requirements for a mortgage.

Question 12

What is conversion, and how is it applicable to a foreclosure?

Question 13

What does it mean that a mortgage is assignable, and how is that different from assuming a mortgage?

Question 14

What is an injunction?

Question 15

What duty does a guarantor have under a guaranty?