Hawaii uses mortgages rather than deeds of trust as its primary security instrument. All of the following are characteristics of a Hawaii mortgage transaction EXCEPT:
Correct Answer
D) A trustee holds bare legal title to the property on behalf of the lender during the loan term
A trustee holding bare legal title is a characteristic of a deed of trust arrangement, NOT a mortgage. In a deed of trust (used in many other states), three parties are involved: the trustor (borrower), the beneficiary (lender), and the trustee who holds bare legal title. In Hawaii's two-party mortgage, there is no trustee — the borrower retains title and the lender holds a lien. This is the key structural difference between Hawaii's mortgage system and the deed of trust system used in many mainland states.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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