Which of the following best describes how Minnesota differs from states that use a deed of trust as the primary security instrument?
Correct Answer
C) In Minnesota, the borrower retains legal title, and the lender holds a lien through the mortgage
Minnesota is a lien-theory (mortgage) state. The borrower retains full legal title to the property, and the mortgage creates a lien in favor of the lender as security for the debt. This contrasts with deed-of-trust states, where the borrower transfers legal title to a neutral trustee, who holds it on behalf of the lender until the loan is repaid.
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Related Topics & Key Terms
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Related Concepts
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
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.
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