Mortgages and Foreclosure Self-Quiz

 

 

 

 

 

 

 

 

Carla wants to buy Cheersacre. However, she does not have the $400,000 that Rebecca, the owner of Cheersacre is demanding. So, she borrows $400,000 from Sam and uses Cheersacre as collateral for the loan. Sam is the…
Choice 1 Mortgagor
Choice 2 Mortgagee
Choice 3 Neither of the above
In the previous example, the mortgage involved is a “purchase money mortgage.”
True
False
Red and White are joint tenants in Blueacre. Red wants to borrow $100,000 from First National Bank to take a vacation around the World. However, First National insists on some collateral for the loan. So, Red gives First National a mortgage on his interest in Blueacre. Does this break up the joint tenancy in Blueacre between Red and White?
Choice 1 Yes
Choice 2 Yes; if their state holds of the “title” theory of mortgages
Choice 3 Yes; if their state holds of the “lien” theory of mortgages
Choice 4 No
An equitable mortgage will be inferred when…
Choice 1 A written mortgage already exists
Choice 2 The parties did not intend to create a mortgage, but the court feels a mortgage should exist
Choice 3 It would be unfair for a legal mortgage to exist under the circumstances
Choice 4 The parties intended to create a mortgage interest, but the writing requirement of the mortgage was not fulfilled
A mortgagee holds which of the following rights in mortgaged property?
Choice 1 The right to possession of the property
Choice 2 The right to transfer a complete interest in the property
Choice 3 The right to repossess the property if the loan is defaulted upon
Choice 4 All of the above
Fred takes out a mortgage of $200,000 on Blackacre from Acme Bank. Acme assigns the mortgage to Bloomer Bank for valid consideration. Fred claims that he signed the mortgage note when he was a minor. Can he use that defense against a repossession action by Bloomer?
Choice 1 Yes; even if Bloomer is a holder in due course
Choice 2 Yes; because Bloomer is not a holder in due course
Choice 3 No; if Bloomer is a holder in due course
Choice 4 No; even if Bloomer is not a holder in due course
Fred takes out a mortgage of $200,000 on Blackacre from Acme Bank. Acme assigns the mortgage to Bloomer Bank for valid consideration. Fred claims that the terms of the mortgage note are unconscionable. Can he use that defense against a repossession action by Bloomer?
Choice 1 Yes; even if Bloomer is a holder in due course
Choice 2 Yes; because Bloomer is not a holder in due course
Choice 3 No; if Bloomer is a holder in due course
Choice 4 No; even if Bloomer is not a holder in due course
Fred takes out a mortgage of $200,000 on Blackacre from Acme Bank on April 1, 2003. The mortgage is not recorded right away. On May 1, 2003, Fred sells Blackacre to Barney. Barney records his deed on May 2, 2003. Finally, on May 15, 2003, Acme records its mortgage. Is Blackacre still subject to Acme’s mortgage?
Choice 1 Yes
Choice 2 No
Choice 3 Maybe
Fred takes out a mortgage of $200,000 on Blackacre from Acme Bank on April 1, 2003. The mortgage is not recorded right away. On May 1, 2003, Fred sells Blackacre to Barney. On May 15, 2003, Acme records its mortgage. On May 20, Barney records his deed. Is Blackacre still subject to Acme’s mortgage?
Choice 1 Yes
Choice 2 No
Choice 3 Maybe

 

For the next six questions, assume the following facts:
Donald owns Trumpacre. First Bank holds a mortgage on Trumpacre of $300,000 that is dated January 1, 1999. Second Bank holds a mortgage on Trumpacre of $100,000 that is dated January 1, 2000. Third Bank holds a mortgage on Trumpacre of $500,000 that is dated January 1, 2001. Fourth Bank holds a mortgage on Trumpacre of $200,000 that is dated January 1, 2002.

If Third brings a foreclosure action and Trumpacre is sold for $500,000 after costs, how much of that will Third receive?

Choice 1 $100,000
Choice 2 $200,000
Choice 3 $250,000
Choice 4 $500,000
If Third brings a foreclosure action and Trumpacre is sold for $700,000 after costs, how much of that will First receive?
Choice 1 $0
Choice 2 $300,000
Choice 3 $100,000
Choice 4 $200,000
If Third brings a foreclosure action and Trumpacre is sold for $600,000 after costs, how much of that will Fourth receive?
Choice 1$0
Choice 2 $50,000
Choice 3 $100,000
Choice 4 $200,000
If Third brings a foreclosure action and Trumpacre is sold at the foreclosure sale, will Second’s mortgage on Trumpacre be extinguished?
Choice 1 Yes
Choice 2 No
If Third brings a foreclosure action and Trumpacre is sold for $800,000 after costs, how much of that will Donald receive?
Choice 1 $0
Choice 2 $300,000
Choice 3 $100,000
Choice 4 $200,000
If, instead of Third bringing the foreclosure action, First brings the foreclosure action and Trumpacre is sold for $500,000 after costs. Will Fourth’s mortgage become extinguished?
Choice 1 Yes; because its mortgage is inferior to Firsts’
Choice 2 No; because they are not getting any money

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