Escrow & Title
A satisfaction of mortgage (release of lien) is recorded when:
AThe loan application is approved
BThe mortgage loan is paid in full and the lender releases the lien on the property✓ Correct
CThe property is refinanced
DThe borrower makes 12 consecutive on-time payments
Explanation
When a mortgage is fully repaid, the lender must record a satisfaction of mortgage (or release of deed of trust) in the public records to formally release the lien and provide evidence that the debt is extinguished.
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- What is the primary purpose of a mortgage or deed of trust?Finance
- A buyer assumes the seller's existing mortgage. The buyer is now primarily liable for the loan, but if the lender did not release the seller, the seller's exposure is described as:Finance
- A deed of trust (trust deed) differs from a mortgage in that it involves:Finance
- A deed of trust differs from a mortgage primarily because:Finance
- To be recorded in Arkansas, a deed must be:Escrow & Title
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Key Terms to Know
Deed of Trust
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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