Carlos purchases a home in Worcester, Massachusetts. His lender requires him to sign a promissory note and a mortgage deed. Which of the following best describes the legal effect of the mortgage deed Carlos signs?
Correct Answer
A) It creates a lien on the property as security for the loan
In Massachusetts, a mortgage deed creates a lien on the property in favor of the lender as security for the debt. The borrower (Carlos) retains both legal and equitable title. The mortgage deed does not transfer title; it encumbers the property with a lien that the lender can enforce through foreclosure if the borrower defaults.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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