Under Maine law, which legal theory governs mortgage instruments, meaning the mortgagor retains title to the property while the mortgagee holds a lien as security for the debt?
Correct Answer
B) Lien theory, where the borrower retains legal title and the lender holds a security interest
Maine is a lien theory state. Under lien theory, the mortgagor (borrower) retains legal title to the property throughout the loan term, and the mortgagee (lender) holds only a lien — a security interest — against the property. If the borrower defaults, the lender must pursue judicial foreclosure to enforce that lien, which is consistent with Maine's status as a judicial foreclosure state under 14 M.R.S. §§ 6321–6325.
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Related Topics & Key Terms
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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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Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
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