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10 Cards in this Set
- Front
- Back
5 Types of Security Interests
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1. Mortgage
MortgagOR=DebtOR Mortagee= Creditor, Note holder 2. Deed of Trust. Debtor/Trustor gives deed 3p T'ee connected to Lender. If default, T'ee can foreclose deed by sale. 3. Installment Land Contract 4. Absolute Deed: Deed as collateral for loan. Ct can find "equitable" mortgage. 5. Sale-Leaseback: Owner sells land and leases it back from grantee. |
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Transfer by Mortgagee (Lender)
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* endorse note *assigns mortgage
*MUST go to same person to effect complete transfer. MTG w/o Note: (Split) Note auto follows Mtg or tx of Mtg w/o Note is void. Note w/o MTG: Mtg auto follows properly tx Note (no written assign req'd) |
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Methods of Note Transfer
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1. Endorse and deliver original.
2. Separate document of assignment. * Only method 1 creates a Holder in Due Course |
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Requirement to be
Holder in Due Course |
1. Negotiable note" payable to Bearer or Payee
2. Endorsed by name payee 3. Original delivered to transferee 4. Tr'ee takes in good faith and pays value EFFECT: Takes note free of personal defenses maker could raise. |
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Payment to former Mortgagee
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Because note embodies obligation, payments must be made to possessor of note OR they don't count and can be forced to pay twice.
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Transfer by Mortgagor (Debtor)
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Transfer by convey deed
1. Gr'EE takes subject to Mtg b/c it remains on the land. 2. Assumption: G'EE signs assumption agmt and then personally liable for mtg. 3. Rel'p of parties: G'EE primarily liable, Lender is 3PB, Original M'OR liable as surety. XX: If Lender and G'EE modify, original M'OR discharged of liability. |
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Due-On-Sale Clause
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Mortgage clause requires full payment of loan if M'OR transfer any interest w/o Lender's consent
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Foreclosure (Junior Interest Rules)
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1. FC wipes out all interests created after MTG being f/cl
Interests inc: jr mtg, liens, leases, easements. 2. Jr interests and have right to redeem to save interest - must have notice (be parties to FC action) |
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Foreclosure (Senior Interest Rules)
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FC Action has NO EFFECT on interest senior to mtg being f/cl. Buyer at FC sale takes prop subject to interest, but is NOT personally liable for sr. interests.
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Priority of Mortgages as Foreclosure (General rule)
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Priority of mtgs determines by time place on property. When mtg FC, buyer takes title as it existed when THAT mtg place (that's why jr interests are terminated)
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