How is a mortgage secured on title?

How is a mortgage secured on title?

• A. A loan secured by a declaration of home value.
• B. A loan secured by a pledge of personal property only.
• C. A loan secured by a charge registered against the property.
• D. A loan secured by a mortgage deed outside title.

Answer: (D)

The key idea is that a mortgage creates a lien on the property by registering a charge on the title. When the charge is registered against the property's title, the lender gains a secured interest that can be enforced against the property if the borrower defaults. The instrument used to document the loan is a mortgage deed, but its power comes from the registered charge on title, not from something kept outside the title. Pledging personal property would secure the loan with assets other than the real estate, which isn’t how real estate mortgages are secured. A declaration of home value doesn’t create a security interest in the property. And a mortgage deed outside title wouldn’t attach to the property’s title, so it wouldn’t give the lender a valid claim against the real estate.

The key idea is that a mortgage creates a lien on the property by registering a charge on the title. When the charge is registered against the property's title, the lender gains a secured interest that can be enforced against the property if the borrower defaults. The instrument used to document the loan is a mortgage deed, but its power comes from the registered charge on title, not from something kept outside the title.

Pledging personal property would secure the loan with assets other than the real estate, which isn’t how real estate mortgages are secured. A declaration of home value doesn’t create a security interest in the property. And a mortgage deed outside title wouldn’t attach to the property’s title, so it wouldn’t give the lender a valid claim against the real estate.