Property Ownership
In New York, a 'lien theory' state, the mortgagor (borrower) retains:
ANo interest in the property until the mortgage is fully paid
BLegal title to the property; the mortgage is only a lien on the title in favor of the mortgagee (lender)✓ Correct
CEquitable title only, while the lender holds legal title
DEqual title with the lender throughout the mortgage term
Explanation
New York is a lien theory state. This means the mortgagor (borrower) retains legal title to the property; the mortgage creates only a lien (a security interest) on the property in favor of the lender.
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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.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Community PropertyIn community property states, most property acquired during marriage is owned equally by both spouses, regardless of who paid for it.
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