Which type of security instrument does Iowa primarily use to secure a mortgage loan?
Correct Answer
B) Mortgage under lien theory
Iowa is a lien theory state that uses a mortgage as its primary security instrument. Under lien theory, the borrower retains legal title to the property while the lender holds a lien against it as security for the loan. The lender does not take title unless the borrower defaults and foreclosure is completed.
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Related Topics & Key Terms
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Related Concepts
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.
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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