At a Friday closing, Marcus Hill signs a note, a deed, and a mortgage. The lender later explains that one of those documents gives the home as collateral and allows foreclosure if Marcus defaults. Which document is the lender describing?
Correct Answer
A) The mortgage, also called the security instrument
The mortgage, also called the security instrument in many closings, pledges the property as collateral for the loan. By signing it, Marcus gives the lender foreclosure rights if the debt is not repaid according to the note.
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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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