Mortgage (Theories)
Often signed alongside the security instrument, this document is the borrower’s personal promise to repay the loan under specified terms.
What is the mortgage note?
This segment of the mortgage industry is where borrowers and lenders meet directly to originate home loans.
What is the primary market?
This condition requires the borrower to keep the property insured against loss to protect both their investment and the lender’s interest.
What is maintenance of insurance?
These legally required responsibilities—loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care—define the obligations of an agent to their client.
What are fiduciary duties?
These agents represent either the person buying or selling a property, working in their client’s best interest during the transaction.
Who are buyers/seller agents?
This document conveys an interest in the property to secure a loan and is recorded to give public notice of the lender’s claim.
What is the mortgage deed?
After loans are made, they’re often bundled and sold in this marketplace, which provides liquidity to lenders.
What is the secondary market?
Borrowers must stay current on these obligations, including property taxes and any special assessments levied by local authorities.
What is payment of taxes and assessments?
This licensed professional can operate a real estate office, hire agents, and oversee transactions.
Who is a broker?
When a single agent represents both the buyer and the seller in the same transaction, this arrangement is in place—usually with full disclosure and consent.
Who is a dual agent?
Under this theory, the borrower keeps legal title to the property, while the lender holds only a security interest until the loan is paid.
What is lien theory?
Created in 1938, this major secondary-market entity buys conventional mortgages to keep funds flowing for lenders.
What is Fannie Mae? (FNMA)
This condition obligates the borrower to keep the property in good working order and perform necessary upkeep.
What is maintenance and repair?
Working under a broker’s supervision, this individual assists clients with buying, selling, or leasing property but cannot operate independently.
Who is a salesperson?
This type of agent has authority to perform a specific act or transaction on behalf of the principal.
Who is a special agent?
In this approach followed by some states, the lender actually holds legal title during the life of the mortgage, with the borrower retaining equitable title.
What is title theory?
Established in 1970, this government-sponsored enterprise focuses on purchasing conventional mortgages from smaller banks and thrifts.
What is Freddie Mac? (FHLMC)
Borrowers are prohibited from damaging the property or making major changes without the lender’s consent under this condition.
What is no waste or unauthorized alterations?
This type of broker offers fewer services than a full-service agent, often only helping with listing or showing a property.
What is a limited service broker?
Authorized to handle a series of transactions or ongoing business matters for a client, this agent has broader powers than a special agent.
Who is a general agent?
Blending elements of both lien and title approaches, this theory gives the lender legal title only if the borrower defaults.
What is intermediate theory?
Part of the U.S. government, this agency guarantees mortgage-backed securities backed by FHA, VA, and USDA loans—making them highly attractive to investors.
What is Ginnie Mae? (GNMA)
This provision allows the lender to take steps to preserve the collateral’s value in case the borrower fails to meet the mortgage obligations.
What is protection of lender’s security?
Also called this- these agents assist both parties in a transaction without representing either side as a traditional agent.
Who are transaction brokers/facilitators?
With the broadest authority, this agent can act on behalf of the principal in all matters that can be legally delegated.
Who is a universal agent?