Question

To purchase a house, Becky obtains a mortgage loan from Countywide Bank. The lender should record the mortgage to

a. be officially on record as holding an interest in the property.

b. secure itself in the position of an unsecured creditor.

c. preserve a copy of the loan in a separate location.

d. obtain reimbursement for a portion of the loan if the debtor defaults.

Answer 1

To purchase a house, Becky obtains a mortgage loan from Countywide Bank. The lender should record the mortgage to

a. be officially on record as holding an interest in the property.

b. secure itself in the position of an unsecured creditor.

c. preserve a copy of the loan in a separate location.

d. obtain reimbursement for a portion of the loan if the debtor defaults.

The correct answer is a) be officially on record as holding an interest in the property. A mortgage loan is a loan given against an immovable property like some real estate or a house. In this case, the house or the property is kept as collateral security for the sanctioned loan until the time the borrower fully repays the loan. It is, therefore, the primary duty of the lender to record the mortgage to be officially on record as holding an interest in the property. Recording gives the lender the legal ownership of the property till such times as the borrower repays the loan. Hence, recording is a very important part of mortgage loan as failing to do so may result in an ownership dispute of the property at a later stage.