Question

A concept under which a mortgage creates a voluntary financial obligation against the borrower's property that may be enforced by foreclosure but does not transfer title to the lender, contrary to the practice in title theory states.

a) Title Theory
b) Lien Theory
c) Equitable Title
d) Deed of Trust

Answer 1

In lien theory states, a mortgage creates a financial obligation against the borrower's property but does not transfer title to the lender.

Step-by-step explanation:

The concept described in the question is called Lien Theory. In lien theory states, such as California, New York, and Florida, a mortgage creates a voluntary financial obligation against the borrower's property. This obligation can be enforced by foreclosure, but it does not transfer title to the lender. The borrower retains ownership of the property while being subject to the mortgage lien.