South-Western Publishing©2002 By Charles J. Jacobus Real Estate Principles Ninth Edition Real Estate: An Introduction to the Profession Ninth Edition South-Western Publishing©2002

Chapter 9 Mortgages and Notes _______________________________________

South-Western Publishing©2002 Promissory Note Contract between a borrower and lender Obligor, obligee Principal Acceleration clause Signature

South-Western Publishing©2002 Note and Mortgage Sequence Step 1 Buyer gives note to lender and receives $$ Step 2 Buyer pays $$ to seller and receives deed Step 3 Buyer has clear title and gives mortgage to lender

South-Western Publishing©2002 The Mortgage Instrument A separate agreement from the note that provides collateral to the lender to back up the promise made in the note by the borrower/mortgagor.

South-Western Publishing©2002 Promissory Note Secured by Mortgage

South-Western Publishing©2002 Mortgage

South-Western Publishing©2002 Mortgage (continued)

South-Western Publishing©2002 Debt Priorities First mortgage / Senior mortgage Second mortgage / Junior mortgage Subordination Chattel liens Foreclosure / Power of Sale

South-Western Publishing©2002 Mortgage Foreclosure: Simplified Overview

South-Western Publishing©2002 Key Terms Acceleration clause Deficiency judgment First mortgage Foreclosure Junior mortgage Mortgage Mortgagee Power of sale Subordination