Contracts
In Montana, a 'release clause' in a blanket mortgage allows the borrower to:
ARelease themselves from personal liability on the loan
BHave individual parcels released from the lien upon payment of a specified amount per parcel, allowing partial sales✓ Correct
CRelease all collateral upon payment of 50% of the loan balance
DSubstitute one property for another as collateral
Explanation
A release clause in a blanket mortgage allows a developer or subdivider to release individual lots from the mortgage lien as each lot is sold and a specified payoff amount is paid to the lender, without paying off the entire loan.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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