Real Estate Exam Guide Ch. 6

Front 1

Deficiency Judgment

Back 1

If amount realized at foreclosure sale is not sufficient to satisfy the debt owed to foreclosing mortgagee, it's possible for deficiency judgment to be granted for the difference between sales price and amount owing.

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Front 2

Contracts for Deed
(Land Sales Contracts)

Back 2

Financing Agreements where seller retains legal title of security for borrower's promise to pay

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Front 3

Equitable Title

Back 3

Interest in property prior to receipt of legal title.

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Front 4

Redemption

Back 4

(in some states)

Borrowers have a statutory period during which to redeem the property by paying the foreclosure sales price plus interest and penalties.

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Front 5

3 basic instruments used to finance real estate

Back 5

Mortgage,
Trust Deed (Deed of Trust),
Land Contract (Contract for Deed)

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Front 6

Hypothecated

Back 6

Borrower retains possession, while lender holds security interest.

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Front 7

Intermediate Theory

Back 7

Title remains with the borrower, but it automatically transfers to lender in event the borrower defaults.

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Front 8

Lien Theory

Back 8

Borrower retains title and gives lender lien on property. The lien is perfected when the mortgage is recorded in the county where the real estate is located.

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Front 9

a Note

Back 9

It is a promise to pay a sum of money. Primary evidence of the debt. The security for the note is the financing instrument.

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Front 10

Deed of Trust
(Trust Deed, Trust Indenture)

Back 10

3-party instrument:

Where trustor (borrower) gives a note to beneficiary (lender) and,
as security for note, conveys title and/or a power of sale to trustee (3rd person).

pg.112

Front 11

Title Theory

Back 11

(Different mortgage theory depends on state)

Title Theory State - Borrower transfers title to lender. When mortgage paid, title reverts back to borrower.

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