Question

In one state, a mortgagee holds a lien on real property offered as collateral for a loan. The mortgagor retains both legal and equitable title to real property. If the borrower defaults on the loan, the lender must go through formal foreclosure proceedings to recover the debt. This state can be BEST characterized as what kind of state?

A) Intermediate theory
B) Mortgage theory
C) Title theory
D) Lien theory

Answer 1

D) Lien theory

Step-by-step explanation:

Lien theory -

According to this theory , during the term of mortgaging , the buyer holds deed to the property .

And the buyers insures to for all the payments to the lender and the process of mortgaging becomes a lien on the property , but the title is with the buyer only .

The lender's lien is removed as soon as all the payments are done .

Hence , the best state defined in the question is the Lien theory .