What is a mortgage, Alice purchases a home for $150,000.

What is a mortgage

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Reference no: EM131795809

1. Alice purchases a home for $150,000. She borrows $100,000 from Local Bank, using the house as collateral, and giving the bank a mortgage. The representative of Local Bank forgets to record the mortgage. Alice sells the house to Bill after Bill reviews records but finds no mortgage on the property. Alice does not tell him about the loan from the bank, and leaves town soon after receiving the purchase money from Bill. Alice does not pay Local Bank the remaining loan balance of her loan. Which of the following is true?

A) Local Bank can foreclose on the property only if it can establish that an honest mistake was involved, and that its business practice was to record mortgages.

B) Bill takes free of the claim of the bank only if he can show that the bank had a habit of not recording mortgages, and that the bank was negligent.

C) Local Bank can foreclose on the property if it wants.

D) Bill owns the house free of any interest of Local Bank.

E) Bill is liable on Alice's loan to Local Bank, but the bank cannot foreclose on the property.

2. What is a mortgage?

A) a security agreement in which real property is pledged as collateral for the related debt

B) a contract to purchase a house or other real property

C) a loan to purchase a house or other real property

D) an unsecured agreement in which real property is pledged as collateral for the related debt

E) any loan associated with real property

Reference no: EM131795809

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