In South Carolina, what type of legal theory governs the relationship between a borrower and lender in a mortgage transaction?
Correct Answer
A) Title theory — the lender holds legal title to the property during the loan term
South Carolina follows the lien theory of mortgages. Under this theory, the borrower (mortgagor) retains legal title to the property throughout the loan term. The lender (mortgagee) does not hold title but instead holds a lien — a security interest — against the property. This lien gives the lender the right to foreclose judicially if the borrower defaults.
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Related Topics & Key Terms
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Related Concepts
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
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