A real estate agent in Hilton Head, South Carolina is working with a buyer who previously lived in North Carolina. The buyer is confused because in North Carolina, her lender used a deed of trust and a trustee was involved in the transaction. She asks the agent why her South Carolina lender is using a mortgage instead. Which explanation is most accurate?
Correct Answer
A) South Carolina law prohibits deeds of trust entirely; all real property loans must be secured by a mortgage, giving the lender a lien rather than title
South Carolina is a mortgage state that does not use deeds of trust as a standard security instrument for real estate loans. SC law requires the use of mortgages, under which the borrower retains title and the lender holds a lien. This is why the buyer's SC lender is using a mortgage rather than a deed of trust, which is the instrument used in neighboring North Carolina.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
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.
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