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11 Cards in this Set
- Front
- Back
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Mortgage - Defined
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The conveyance of a security interest in land, intended by the parties to be collateral for the repayment of a monetary obligation.
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Mortgage - 2 elements
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i)Debt
ii)Voluntary transfer of a security interest in debtor’s land to secure the debt |
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Must a mortgage be in writing?
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1.LEGAL MORTGAGE: Must be in writing to satisfy SOF
2.EQUITABLE MORTGAGE: Creditor lends money to Debtor, who hands over a deed that is absolute on its face. No mortgage instrument is executed. i)Parol evidence is freely admissible to demonstrate intent of parties ii)If Creditor sells to bona fide 3rd party purchaser, Debtor can only proceed against Creditor for fraud & sale proceeds |
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How may a mortgagee transfer his interest?
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a)Endorsing the note & delivering it to transferee (makes transferee eligible to be a “Holder in Due Course”)
b)Executing a separate document of assignment |
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What is required to be a “Holder in Due Course”?
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Original note is endorsed & delivered to transferee, who takes in good faith w/o any notice of illegality, and pays more than nominal value.
Note must also be negotiable, made payable to mortgagee. |
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What is the benefit of being a holder in due course?
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May foreclose despite the existence of any “personal” defense
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The priority of claims against foreclosure proceeds:
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Attorney’s fees, expenses of foreclosures, and accrued interest on the mortgagee’s loan are paid first
Superpriority belongs to the purchase money mortgage, even over floating liens All other creditors have priority based on when they recorded urplus -> Mortgagor |
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Who are necessary parties to a foreclosure action?
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a) All parties with interests subordinate to the foreclosure action are necessary (or they keep their claim on the land)
b) Debtor is necessary, esp. If mortgagee wishes to proceed against debtor for personal judgment. |
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Equitable Redemption
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Any time prior to the foreclosure sale, Debtor may redeem land by paying the missed payment(s) + interest + costs
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Can the right of equitable redemption be waived?
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cannot be waived (known as “clogging the equity of redemption”)
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Statutory Redemption
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after foreclosure (up to 6 mo-1 yr), Mortgagor may redeem by paying the foreclosure price on the house. Mortgagor usually has the right to possess during the interim.
a)Nullifies the foreclosure sale. b)Does not exist in NY. |
