Finance
In Pennsylvania, 'title theory' versus 'lien theory' of mortgages matters to real estate professionals because:
ATitle theory states require additional transfer tax on mortgages
BPennsylvania is a lien theory state — the borrower retains title, affecting foreclosure procedures and the nature of mortgage liens✓ Correct
CTitle theory states prohibit FHA loans
DBoth theories result in identical outcomes for all purposes
Explanation
Pennsylvania's lien theory means the borrower holds title and the lender has only a security interest (lien). This affects the foreclosure process — lenders must use judicial foreclosure to enforce their lien rights, unlike title theory states where trustees can use non-judicial (power of sale) foreclosure. Understanding lien theory is fundamental to Pennsylvania real estate law.
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