Real Estate Finance Law

PrefacevWestlaw OverviewviiChapter 1.An Introduction to the Law of Mortgages1.1The Basic Mortgage Transaction11.2The Impact of English History51.3The Intervention of Equity71.4The American Development81.5The Title, Lien, and Intermediate Theories of Mortgage Law101.6The Deed of Trust as a Mortgage Variant111.7Mortgage Substitutes and Clogging the Equity of Redemption12Chapter 2.The Necessity and Nature of the Obligation2.1Necessity of Obligation152.2Nature of the Obligation202.3The Necessity of Consideration232.4Description of the Debt27Chapter 3.Mortgage SubstitutesA.Restricting the Right to Redeem3.1Clogging the Equity of Redemption343.2The Option to Purchase as a Clog on the Equity of Redemption403.3Subsequent Transactions43B.The Absolute Deed3.4The Absolute Deed With Separate Instrument of Defeasance463.5The Absolute Deed Coupled With an Oral Understanding--Reasons for Frequent Use483.6Parol Evidence--Admissibility503.7Burden of Proof523.8Factors Establishing an Absolute Deed as a Mortgage543.9Effect of Absolute Deed Between the Parties583.11Rights of Grantor on Sale by the Grantee59C.The Conditional Sale3.17Nature of the Transaction603.18Extrinsic Evidence623.19Factors Establishing Conditional Sale as a Mortgage65E.The Installment Land Contract3.26An Introduction to the Installment Land Contract703.27The Forfeiture Remedy--Some General Considerations713.28Statutory Limitations on Forfeiture733.29Judicial Limitations on Forfeiture773.30Constitutionality of Forfeiture933.31The Deed in Escrow as an Aid to Vendor Forfeiture Remedy963.32Other Remedies for Vendors973.33Title Problems for Vendees1033.34Title Problems for Vendors1083.35Mortgaging the Vendee's Interest--Problems for Mortgagees1103.36Judgments Against Parties to Installment Land Contracts1123.37Mortgaging the Vendor's Interest--Problems for Mortgagees1153.38The Installment Land Contract--A Call for Its Demise121F.The Negative Covenant as a Mortgage Substitute3.39The Negative Covenant and the "Coast Bank" Mortgage124Chapter 4.Rights and Duties of the Parties Prior to ForeclosureA.Theories of Title and the Right to Possession4.1The Title Theory1304.2The Lien Theory1344.3The Intermediate Theory137B.Tortious Injury to Land by Mortgagor or Third Persons4.4Tortious Injury by the Mortgagor1394.5Injury by Third Parties1474.10Equitable Relief Against the Mortgagor for Threatened Injury1504.11Enforcing Specific Covenants Against Waste152C.Rights in the Product of the Res4.12Eminent Domain1554.13Insurance--Some General Considerations1594.14Insurance--Types of Policies1634.15Insurance--Restoration of Premises1674.16Insurance--Effect of Foreclosure Purchase by Mortgagee171D.Escrows or Reserves for Taxes and Insurance4.17Escrow Accounts--Some General Considerations1754.18Judicial Scrutiny of Escrow Accounts1774.19Statutory and Related Regulation180E.Right to Rents4.20General Considerations1864.23Lien States187F.Mortgagee in Possession4.24"Mortgagee-in-Possession" Rule1884.25What Constitutes Possession1934.26Liability of Mortgagee to Third Parties1954.27The Mortgagee's Duty to Account--Nature and Scope1964.28The Duty to Account for Rents1994.29Maintenance and Improvements201G.Receiverships4.33General Considerations2064.34Basis for Appointment--Title and Lien Jurisdictions2084.35Agreements for Rents, Profits, and Receiverships2144.36Ex Parte Receivership--Constitutional Problems2264.40Receivership--Mortgagor in Possession2284.41Receivership--Mortgagor Conducting Business2304.42Receivership--"Milking" by the Mortgagor2324.43Priorities Between Mortgagees as to Rents238I.Mortgagee Liability for Environmental Problems4.47Introduction2404.48Mortgagee Liability Under CERCLA2424.49The 1992 E.P.A. Lender Liability Regulation2454.50The CERCLA Lien2504.51Environmental Problems--Suggestions for Mortgagees251Chapter 5.Transfer by the Mortgagor and the MortgageeA.Transfer by the Mortgagor5.1Transferability of Mortgagor's Interest2545.2Methods of Sale of Mortgaged Land2555.3Transfer "Subject To" the Mortgage2575.4Assumption of the Mortgage--In General2595.5Assumption of the Mortgage--Deed Provisions2625.6Assumption of the Mortgage--Statute of Frauds2635.7Assumption of the Mortgage--Parol Evidence Rule2655.8Implied Personal Obligations2685.9Rights of Transferor--Non-assuming Grantee2705.10Rights of Transferor--Assuming Grantee2745.11Mortgagee vs. Assuming Grantee--In General2785.12Mortgagee vs. Assuming Grantee--Third Party Beneficiary2805.14Mortgagee vs. Assuming Grantee--Miscellaneous Theories2815.15Successive Purchasers2835.16Assumption by Second Mortgagee2875.17Grantee's Defenses Against Mortgagee2895.18Subsequent Discharge or Modification of Rights Between Grantor and Grantee2925.19Extension, Release and Other Modification--Suretyship and the Mortgagor2955.20Effect of the Uniform Commercial Code, pre-1990 Official Text, on Suretyship Defenses315B.Restrictions on Transfer by the Mortgagor5.21The Due-on Clauses--Introduction3185.22Due-on Clauses--Pre-Garn-St. Germain Act State Judicial and Legislative Response3245.23Due-on Clauses--Pre-Garn-St. Germain Act Federal Regulation3335.24Due-on Clauses--The Garn-St. Germain Act3355.25The Due-on Clauses--Concealment of Transfers3565.26Due-on Clauses--Conclusion361C.Transfer by the Mortgagee5.27Introduction--Nature of the Mortgagee's Interest3645.28Methods of Transfer3685.29Negotiability and Negotiation3875.30Statutory and Regulatory Limitations on the Holder In Due Course Doctrine3985.31Rights of Holders in Due Course4055.32Rights of Assignees Who Are Not Holders in Due Course4085.33Payment to Assignor as a Defense4145.34Impact of Recording Acts4235.35Partial Assignments and Participations439Chapter 6.Discharge of the MortgageA.Payment6.1Prepayment--General Considerations4556.2Prepayment Clauses--Judicial Treatment4606.3Prepayment Clauses--Involuntary Prepayment4686.4Prepayment Clauses--Legislative and Other Nonjudicial Regulation4736.5Prepayment Penalties--Collection Incident to Due-on-Sale Enforcement4826.6Payment and Redemption4846.7Tender on or After Maturity4946.8Late Payment Charges and Default Interest--Introduction5006.9Late Payment Charges and Default Interest--Judicial Interpretation5026.10Late Payment Charges and Default Interest--Legislative and Other Regulatory Impact510C.Merger6.15Merger--General Considerations5136.16Merger--Between the Parties to the Mortgage5146.17Merger--Intervening Interests520D.The Deed in Lieu of Foreclosure6.18Reasons for Use5246.19Potential Pitfalls for the Mortgagee525Chapter 7.ForeclosureA.Redemption from the Mortgage7.1Redemption From the Mortgage and Statutory Redemption--Definitions5337.2Who May Redeem5347.3Amount to Be Paid537B.Accrual of the Right to Foreclosure7.6Acceleration Clauses--In General5397.7Limitations on Acceleration5437.8The Absence of an Acceleration Clause--Effect on Foreclosure552C.Strict Foreclosure7.9The Nature of Strict Foreclosure5547.10Use of Strict Foreclosure555D.Judicial Foreclosure7.11Judicial Foreclosure--General Characteristics5587.12Parties Defendant and the "Necessary-Proper" Party Distinction5607.13Joinder--Effect of Recording Acts and Lis Pendens5657.14Senior Lienors and Adverse Interests5687.15Omitted Parties5727.18Judicial Foreclosure--Defects and Title Stability580E.Power of Sale Foreclosure7.19General Considerations5817.20Defective Power of Sale Foreclosure--The "Void-Voidable" Distinction5857.21Defective Power of Sale Foreclosure--Specific Problems5887.22Defective Power of Sale Foreclosure--Remedies6057.23Constitutionality of Power of Sale Foreclosure--Introduction6157.24Constitutional Problems--Notice6157.25Constitutional Problems--Hearing6217.26Constitutional Problems--Waiver6257.27Constitutional Problems--State Action6287.28Constitutional Problems--Federal Action6347.29Constitutional Problems--Title Difficulties6397.30Constitutional Problems--Conclusion641F.Disposition of Surplus7.31Surplus--General Rules6437.32Surplus--Some Special Problems647Chapter 8.Statutory Impacts on ForeclosureA.Regulation of Deficiency Judgments8.1Deficiency Judgments--In General6518.2The "One Action" Rule6568.3Anti-deficiency Legislation658B.Statutory Redemption8.4General Characteristics6898.5Who May Redeem--Nature of Interest6928.6Effect of Redemption--By Mortgagor or Successor6948.7Effect of Redemption--By Lienors6998.8Reforming the Foreclosure Process702D.Bankruptcy8.12General Considerations7068.13Straight Bankruptcy7088.14The Chapter 11 Reorganization7138.15The Chapter 13 "Wage Earner" Plan7338.16Chapter 12 (Family Farmer Bankruptcy Act of 1986)7518.17Setting Aside Pre-bankruptcy Foreclosures7578.18Rents in Bankruptcy7678.19Installment Land Contracts in Bankruptcy778Chapter 9.Some Priority Problems9.1Purchase Money Mortgage Priority Concepts7819.2Purchase Money Mortgages--Recording Act Problems7889.3After-Acquired Property Clauses7929.4Replacement and Modification of Senior Mortgages--Effect on Intervening Lienors7979.5Fixtures--Introduction8049.6Fixtures--Pre-UCC Law8059.7Fixtures Under the UCC8079.8Wraparound Mortgages815Chapter 10.Subrogation, Contribution and MarshalingA.Subrogation and Contribution10.1General Principles827B.Marshaling10.9General Principles833Chapter 11.Government Intervention in the Mortgage Market11.1The Mortgage Market, Institutional Lenders, and Their Regulators84011.2Mortgage Insurers and Guarantors84811.3Government-Sponsored Mortgage Market Support Agencies and Private Securitization86411.4Alternative Mortgage Instruments88111.5Discrimination in Mortgage Lending90811.6Federal Preemption of State Mortgage Law921Chapter 12.Financing Real Estate Construction12.1Construction Lending--An Overview93812.2Construction Contracts and Bonds94612.3Mortgage Loan Commitments95712.4Mechanics' Liens97512.5Mechanics' Liens--Constitutionality98512.6The Stop Notice and the Equitable Lien99512.7Future Advances100512.8Dragnet Clauses102512.9Subordination103312.10Improper Disbursement of Loan Proceeds105112.11Lender Liability for Construction Defects or Other Wrongful Acts of Contractors1065Table of Cases1089Index1235