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Exam 20: Mortgages and Security Interests

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Question 21

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If the mortgagor has defaulted or has failed to perform some other agreement in the mortgage, the mortgagee has the right to apply to a court to have the property sold. This is called the right to:

A) acceleration.
B) foreclosure.
C) perfection.
D) attachment.

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Question 22

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Daly and Leva entered into an agreement whereby Leva borrowed $15,000 from Daly, and Daly took a security interest in Leva's next corn harvest. The financing statement identified Daly and Leva by name and included their mailing addresses. Leva signed the statement. Can the security interest, in this case, be perfected by the financing statement filed?

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When a financing statement inc...

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Question 23

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Linda puts up her land as collateral for a loan from Small Bank. Linda is a mortgagee.

Iko purchased a house through Stockholm Bank Pvt., Ltd. A year later, Iko wanted to make improvements on the mortgaged property and borrowed money from Jeremy, mortgaging the same property again. Jeremy is unaware of the mortgage of the house by Stockholm Bank and records the mortgage. Analyze the situation in case Iko is unable to repay both the mortgagees.

Morey purchased a house for $150,000, paying $15,000 in cash and giving a mortgage to BigBank for the balance. When Morey defaulted on the loan, BigBank foreclosed and sold the house for $25,000 less than Morey owed. Morey believed he no longer owed BigBank any money. Discuss the case.

An acceleration of the debt:

Which of the following is true of conventional fixed-rate mortgages?

Which of the following is true of recording a mortgage?

Brianna is purchasing an apartment building from Austin that already has a $500,000 mortgage on it. Brianna is uncertain if she can make money on this purchase and certainly does not want the responsibility of paying the mortgage. Discuss how Brianna might structure this purchase to avoid responsibility for the preexisting mortgage.

Carol borrows $50,000 to purchase seven industrial Xerox copying machines, and open up her own copy shop. The bank loan requires that Carol grant the bank a security interest in any property acquired after the original agreement is signed. After she shows the loan letter to Xerox, it agrees to sell her the copiers for $80,000 to be paid over five years. Who has priority in the copying machines?

Suri purchased a new laptop for $2,500 from Gadget World. To pay for it, she borrowed money from ATS Finance, which took a security interest in the laptop by entering into a security agreement with Suri. How will the security interest be perfected in this case?

Friendly Furniture Co. wants to repossess a sofa in Ed's living room, but Ed refuses to allow the repossession crew into his house. Discuss what options Friendly has.

A furniture store that puts up its inventory as collateral for a loan will grant the lender a floating lien.

A conventional fixed-rate mortgage involves no government backing by either insurance or guarantee.

A point is a one-time charge equal to ____________ of the principal amount borrowed.

A ____________ loan is that which deliberately misstates the qualifications of a borrower to push a loan through the approval process.

The right to equity of redemption:

Furniture loans, home improvement loans, student loans, and construction loans are examples of mortgage-backed securities.

A(n) ____________ is a transfer of an interest in real property for the purpose of creating a security for a debt.

Rae's mortgage payment check is received a day late by Big Bank. Big Bank refuses the check and accelerates the mortgage debt. Rae is unable to pay this demand, and Big Bank brings action to foreclose the mortgage. Discuss what defenses, if any, Rae has to the foreclosure action.