1. © 2010 by Cengage Learning Mortgages and Notes Chapter 9 ________________ Mortgages and Notes

2. © 2010 by Cengage Learning  Contract between a borrower and lender  Obligor, obligee  Principal  Acceleration clause  Signature

3. © 2010 by Cengage Learning Step 1 Buyer gives note to lender and receives $$ Step 2 Buyer pays $$ to seller and receives deed Step 3 Buyer has clear title and gives mortgage to lender Note and Mortgage Sequence

4. © 2010 by Cengage Learning The Mortgage Instrument A separate agreement from the note that provides collateral to the lender to back up the promise made in the note by the borrower/mortgagor.

5. © 2010 by Cengage Learning Promissory Note Secured by Mortgage

6. © 2010 by Cengage Learning

7.  Covenant to pay taxes  Covenant against removal  Covenant of insurance  Covenant of good repair  Covenant of preservation & maintenance

8. © 2010 by Cengage Learning  First mortgage / Senior mortgage  Second mortgage / Junior mortgage  Subordination  Chattel liens  Foreclosure / Power of Sale Debt Priorities

9. © 2010 by Cengage Learning  Partial release  Subject to  Assumption  Novation  Estoppel

10. © 2010 by Cengage Learning Overview of Mortgage Foreclosure

11. © 2010 by Cengage Learning  Acceleration clause  Deficiency judgment  First mortgage  Foreclosure  Junior mortgage  Mortgage  Mortgagee  Power of sale  Promissory note  Subordination Key Terms