A Missouri real estate broker, Linda, has a client who is purchasing a commercial property in St. Louis using seller financing. The seller wants to use a traditional mortgage rather than a deed of trust as the security instrument. Which of the following statements most accurately describes this situation under Missouri law?
Correct Answer
C) A mortgage is permissible in Missouri, but foreclosure would require judicial proceedings rather than the non-judicial trustee's sale process
While Missouri primarily uses deeds of trust as security instruments, mortgages are not prohibited under Missouri law. A traditional two-party mortgage may be used in Missouri real estate transactions, including seller-financed deals. However, the critical distinction is that the non-judicial trustee's sale foreclosure process under RSMo §§ 443.290–443.430 is only available for deeds of trust—not for mortgages. If the seller uses a mortgage instead of a deed of trust, foreclosure upon default would require judicial proceedings (a court lawsuit), which is a slower and more expensive process. This is a key reason why deeds of trust are strongly preferred in Missouri.
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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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