In California, a borrower signs both a promissory note and a deed of trust to obtain a home loan. If the borrower defaults, which document determines whether the lender can pursue the borrower's personal assets?
Correct Answer
B) The promissory note, because it creates the borrower's personal obligation to repay
The promissory note creates the borrower's personal obligation to repay the debt. It is the basis for any personal liability, including the ability to pursue the borrower's personal assets (subject to California's anti-deficiency protections).
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Related Topics & Key Terms
Key Terms:
Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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