Mortgages and Deeds of Trust
2011©Cengage Learning. All Rights Reserved.

 Arises out of a loan of money.
 Security Separate from Obligation.
 A security cannot exist without a debt.
2011©Cengage Learning. All Rights Reserved.

 anything capable of being reduced to monetary value may be secured by a lien .
2011©Cengage Learning. All Rights Reserved.

 An unconditional written promise to pay someone a sum of money at a specified future date.
 Most notes are negotiable instruments .
2011©Cengage Learning. All Rights Reserved.






Level Payment Notes
Unequal Payment —Constant Reduction
Unequal Payment —Adjustable Rate Loans
Unequal Payment —Balloon
Unequal Payment —Negative Amortization
2011©Cengage Learning. All Rights Reserved.

 a three-party security device by which the owner of property (trustor) transfers title in trust to a third party ( trustee) to hold as security for the repayment of a debt to the lender ( beneficiary).
2011©Cengage Learning. All Rights Reserved.

 A two-party instrument by which the lender
( mortgagee) obtains a lien on the owner’s
( mortgagor’s) property.
 Seldom used by lenders in California.
2011©Cengage Learning. All Rights Reserved.

 Acceleration Clauses
 Default of Payment Clause
 Due-on-Sale Clause
 Due-on-Encumbrance Clause
 Assignment of Rents Clause
 Late Charges Clause
2011©Cengage Learning. All Rights Reserved.

 Prepayment Clause
 Or-More Clause
 Prepayment Fees

Residential Loans

Governmental Loans
2011©Cengage Learning. All Rights Reserved.

 Wraparound Deeds of Trust
 Blanket Deed of Trust
2011©Cengage Learning. All Rights Reserved.

 Future Advances Clause
 Subordination Agreements
2011©Cengage Learning. All Rights Reserved.

 Consumer loans

Commercial loans

Unregulated loans.
 Institutional lenders
 Real estate brokers
 Purchase money loans.

Legislative regulation
2011©Cengage Learning. All Rights Reserved.

 The borrower is relieved from obligation to pay any future, unpaid interest.
 He needs only to repay the principal.
 The lender forfeits any & all future amounts of interest due under the loan.
2011©Cengage Learning. All Rights Reserved.

 full disclosure of the true costs of credit
 APR
 Amount of down payment
 Loan terms
 Monthly payment
 Real Estate Loans Covered
 Rescission Rights
2011©Cengage Learning. All Rights Reserved.

 Real Property Loan Law
 Loan Applications
 Appraisal Reports
 Processing Time
 False Loan Information
 Sale of Loan
 Private Mortgage Insurance
 Impound Accounts
2011©Cengage Learning. All Rights Reserved.

 Since 1989, most brokers who make or arrange mortgage loans will be required to prepare a disclosure statement called a
Lender/Purchaser Disclosure Statement.
 Made to almost all noninstitutional lenders & note purchasers.
2011©Cengage Learning. All Rights Reserved.

 Due to the increasing number of people paying such exorbitant interest rates and finance charges on secured loans that they lose their homes this complex law regulates certain consumer loans under $250,000 that are made after July 2002.
2011©Cengage Learning. All Rights Reserved.

 Loans made to high-risk borrowers that probably would not have qualified under the more traditional requirements.
2011©Cengage Learning. All Rights Reserved.

 Insufficient amount of money due lender under foreclosure process.
 Restrictions
2011©Cengage Learning. All Rights Reserved.

 Front seller
 From third person
2011©Cengage Learning. All Rights Reserved.

FORECLOSURE PROCESS &
PROCEDURE

Trustee’s Foreclosure
(1) secured by owner-occupied residences
(2) that were made during 2003 - 2007.
2011©Cengage Learning. All Rights Reserved.

Trustee’s Foreclosure Process
 Pre-foreclosure Evaluation for Crisis Period
Loans
 Notice of Default
 Right to Reinstate


Notice of Sale
Trustee’s Sale
2011©Cengage Learning. All Rights Reserved.

Judicial Foreclosure
 File Lawsuit
 Right to Reinstate and Equity of Redemption
 Trial and Court Judgment
 Sale of Property
 Sale of Residential Property in Foreclosure
2011©Cengage Learning. All Rights Reserved.

EFFECTS OF FORECLOSURE ON
OTHER DT
 Foreclosure of a senior lien extinguishes all junior liens



Notice of Delinquency
Effect of Junior’s Foreclosure
Effect of Senior’s Foreclosure
 Options for Junior Lienor
2011©Cengage Learning. All Rights Reserved.

TRANSFER OF SECURED PROPERTY
 Right to Transfer
 Effect of Transfer on Debt
 Subject To
 Assumption
 Liability Requires Deficiency Judgment
 Novation
2011©Cengage Learning. All Rights Reserved.