What is the main difference between title theory and lien theory states regarding mortgage law?
Correct Answer
D) Who holds legal title to the mortgaged property
Correct: D - Who holds legal title to the mortgaged property. The fundamental difference is that title theory states give legal title to the lender while lien theory states allow borrowers to retain legal title. Why not A: This option is incorrect because "Interest rates charged on mortgages" does not match the rule tested by the question. The correct answer is "Who holds legal title to the mortgaged property". The fundamental difference is that title theory states give legal title to the lender while lien theory states allow borrowers to retain legal title. Why not B: This option is incorrect because "The length of the foreclosure process" does not match the rule tested by the question. The correct answer is "Who holds legal title to the mortgaged property". The fundamental difference is that title theory states give legal title to the lender while lien theory states allow borrowers to retain legal title. Why not C: This option is incorrect because "Whether mortgages or deeds of trust are used" does not match the rule tested by the question. The correct answer is "Who holds legal title to the mortgaged property". The fundamental difference is that title theory states give legal title to the lender while lien theory states allow borrowers to retain legal title.
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Related Topics & Key Terms
Key Terms:
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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