In Alabama, when a borrower obtains a mortgage loan to purchase real property, who holds legal title to the property during the loan repayment period?
Correct Answer
A) The borrower retains legal title while the lender holds a lien
Alabama is a mortgage (lien theory) state, not a deed-of-trust state. Under Alabama law, the borrower retains legal title to the property throughout the loan period. The lender does not take title; instead, the mortgage creates a lien against the property as security for the debt. This is codified under Alabama's mortgage law framework (Code of Alabama §35-10-1 et seq.).
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Related Topics & Key Terms
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Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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- → Audit memo Cedar Case highlights this Florida rule. The purchase price is $360,000, and the lender will lend 90% of the price. How much cash down payment must the buyer bring?
- → A California buyer is comparing two deed of trust loan offers. Loan A has a 5.5% interest rate with 0 points. Loan B has a 5% interest rate with 2 points. Which tool required by federal law helps the buyer compare the true cost of these two loans?
- → A Florida real estate licensee is helping a buyer understand loan-to-value ratios. The buyer asks about the maximum LTV typically allowed for conventional loans without private mortgage insurance (PMI). What should the licensee explain?
- → A borrower in Greenville, South Carolina defaults on her mortgage payments. The lender wants to recover the property. Which process must the lender follow under South Carolina law?
- → Tom defaults on his mortgage in Fargo, North Dakota. His lender, Heartland Savings, wants to foreclose. Which of the following correctly describes the foreclosure process Heartland Savings must follow under North Dakota law?
- → Under Alaska's Deed of Trust Act (AS 34.20.070–34.20.135), which of the following is NOT a required party to a deed of trust?
- → James Wilson's share loan application for a co-op in Staten Island was approved. What will secure this loan?
- → Tennessee has which redemption period after foreclosure?
- → Private Mortgage Insurance (PMI) is typically required on a conventional loan when the loan-to-value (LTV) ratio exceeds what threshold?
- → A homeowner in Oklahoma City is purchasing a property with a sales price of $320,000. The buyer is obtaining a conventional loan with a 20% down payment. The lender charges an origination fee of 1.5% of the loan amount. What is the total origination fee the buyer will pay at closing?
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