Which of the following statements correctly identifies Indiana's classification as a mortgage state?
Correct Answer
B) Indiana is a lien theory state where the borrower retains title and the mortgage creates a security lien
Indiana is a lien theory state. Under Indiana's lien theory, the borrower (mortgagor) retains legal title to the property throughout the loan term. The mortgage instrument does not transfer ownership to the lender; instead, it creates a lien (security interest) on the property as collateral for the loan. This is the foundational principle governing Indiana's mortgage system and explains why judicial foreclosure is required.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
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.
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