In Minnesota, what type of security instrument is primarily used to secure a real estate loan, and what does this mean for title during the loan period?
Correct Answer
D) A mortgage; the lender does not hold title during the loan period
Minnesota is a mortgage-theory state. The borrower (mortgagor) retains both legal and equitable title during the loan period. The lender (mortgagee) holds only a lien on the property, not title. This distinguishes Minnesota from deed-of-trust states where a trustee holds legal title.
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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.
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