REAL ESTATE FINANCE
Spring 2008 – Prof. Boss
· mortgage foreclosures (basis functions of them)
· Know what equity of redemption is – don’t need to know its history
· Know that there are mortgage substitutes
o Q: how is equity of redemption applied in our current law and how is it applied (in relation to clogging)
· Don’t need to know conditions and covenants
· Anti-clogging doctrine
· Various kinds of mortgage substitutes that are used to get around the clogging problem
o Absolute deed / conditional sale/ installment K
· Equity of redemption goes hand in hand with mortgage substitutes.
· Installment land K à know what it is – how it works (the deed is Ked for – awarded when its performed) and how the courts protect a vendee in such a K
· Don’t need to know case rules
>> Know the texas rule of if that 40% is paid, then you must have a judicial sale.
· Don’t need to know “vendee’s interest in real estate liens.
Group 3- Thru 398
· Negative covenant does NOT create a mortgage
· Know the difference between title theory / lien theory / intermediate theory
o Page 343 – rights duties and obligations prior to foreclosure
o Depends on what title theory the JX operates under to determine what theory comes with what rights
· Know the majority approach is lien theory – 40 states and the restatement follow this.
· Most important thing about which theory (w/ respect to rights and duties) is “mortgagee in possession”
· Who has rights to rents – assignment of rents clauses in mortgage docs. are generally enforced.
· **** – know what issues a pre-foreclosure mortgagee in possession might face (WASTE)
· Know how Mortgagee in possession issue flows from title theories
· Receiverships – petitioning the court to est. a recr. Is one way to take control of the property w/out actually becoming a mortgagee
· 3 Title Theories –
· How mortgagee in possession issues come from those theories
· How receivership might get around those issues.
Group 4 – 398/435
· Know more about CIRCLA than what is in outline
o Owners and operators are strictly liable – so banks became very cautious b/c they often were one of these parties
o As long as the bank is in control of the property only to the extent of realizing its security interst, it still remains shielded from the liability imposed from CIRCLA
o Lesson learned – mortgagee shouldn’t be to urgent to become mortgagee in possession pre-forclosure because that means they are subject to CIRCLA liability
o Know what a bank can and can’t do
§ Must sell w/in a year, etc.
· Escrow accounts
· Loss payable clause vs. union mortgage clause –
o Loss payable – the mortgagee is added as a loss payable
Group 5 – Foreclosure (560-612)
· Goal of Foreclosure
· Know that there is judicial for. And power of sale for.
· Pre-foreclosure acceleration
· Not going
e liens of mortgagees.
o How does bankruptcy affect the mortgagee
o How does the plan of reorganization of a business
Group 8 – 821/855
· Priority problems – security interests
· Purchase money mortgages
· Fixtures – be able to define one
· After-acquired property clause in deed of trust
Wrap around mortgages – just know how they work
· Underlying mortgage remains unchanged
Know about how modifications to a mortgage can alter another parties priority rights.
Group 9 – chapter 5 “transfer of mortgagor’s interest”
· Difference between “subject to” and “assumption of”
· Three remedies that a granting _something__ has against _somebody__
· DON’T need to know mortgagee’s interest.
Introduction to Mortgage Financing
1. General Terms
a. Deed – document that transfers legal title
i. General Warranty Deed – warrant title all the way back to sovereignty.
“there are no other claims or encumbrances against the title”
ii. Special Warranty Deed – warrants title for time period that grantor owned
“I don’t know what happened before I owned it, but since I have owned it there have been no encumbrances.”