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10 Cards in this Set

  • Front
  • Back
5 Types of Security Interests
1. Mortgage
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.
Transfer by Mortgagee (Lender)
* 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)
Methods of Note Transfer
1. Endorse and deliver original.
2. Separate document of assignment.
* Only method 1 creates a Holder in Due Course
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.
Payment to former Mortgagee
Because note embodies obligation, payments must be made to possessor of note OR they don't count and can be forced to pay twice.
Transfer by Mortgagor (Debtor)
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.
Due-On-Sale Clause
Mortgage clause requires full payment of loan if M'OR transfer any interest w/o Lender's consent
Foreclosure (Junior Interest Rules)
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)
Foreclosure (Senior Interest Rules)
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.
Priority of Mortgages as Foreclosure (General rule)
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)