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Unformatted text preview: es and trust deeds as distinctly different instruments, although both have the same purpose as security devices. HYPOTHECATION
To hypothecate is to give title of a property as security for a loan without the necessity of giving up possession or use of the property. This principle is fundamental to the major instruments of real estate finance, i.e., the trust deed in California and the less common mortgage. Each of these instruments uses the promissory note as the primary evidence of debt, which creates a lien on the property. MORTGAGE CONTRACT
A mortgage is a written contract by which title to property is hypothecated (promised without giving up possession) to secure repayment of money borrowed. The borrower retains both title and possession. CHARACTERISTICS OF MORTGAGE CONTRACT:
Parties – A mortgage contract has two parties, the mortgagor and the mortgagee. • Mortgagor – Owner or buyer (borrower), who gives a mortgage as security to the mortgagee. 8-8 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 8: FINANCING INSTRUMENTS
• Mortgagee – Lender or seller, who receives a mortgage from the mortgagor as security for repayment of a loan. Recording – Recording establishes priority by giving constructive notice “to the world” of the contents of a document For a mortgage to be recordable, it must be acknowledged by the mortgagor (usually in the presence of a notary public who receives the acknowledgment). Release – Upon payment in full, the mortgagor is given a “satisfaction of mortgage.” Upon recording, this releases the title from the lien. A new law effective July 1, 1989, requires that within 30 days after any mortgage has been satisfied, the mortgagee must execute and record a certificate of discharge, and must then, if requested, deliver to the mortgagor the original note and mortgage. (You will note later some different requirements if the obligation was secured by a deed of trust.) FORECLOSURE
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10