Under Wisconsin law, which theory of mortgage ownership applies — meaning the borrower retains legal title to the property while the lender holds only a lien interest?
Correct Answer
D) Lien theory
Wisconsin follows the lien theory of mortgages. Under lien theory, the borrower (mortgagor) retains legal title to the property, and the lender (mortgagee) holds only a lien — a security interest — against the property. The lender cannot take possession without going through the judicial foreclosure process.
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Related Topics & Key Terms
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Related Concepts
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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%.
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