Free practice
The mortgage and note, the mortgagor's duties, selling mortgaged property, and recording
Finish →Question 1 of 40
Which document primarily expresses a borrower's promise to repay principal and interest?
Reveal answer
Correct answer: The promissory note
The note expresses the repayment obligation and its terms. A mortgage provides security for that obligation.
Question 2 of 40
An owner borrows against a building and gives a mortgage to a bank. Which pairing correctly identifies the parties?
Reveal answer
Correct answer: Owner: mortgagor; bank: mortgagee
The owner gives the mortgage and is the mortgagor. The bank receives the security interest and is the mortgagee.
Question 3 of 40
A buyer says, 'Once my New York mortgage is recorded, the lender owns my home until I finish paying.' Which correction best addresses the error?
Reveal answer
Correct answer: The borrower retains ownership, and the mortgage gives the lender a lien.
New York treats a mortgage as a lien. Recording supplies public notice of that security interest; it does not convey ownership to the lender.
Question 4 of 40
Which set of obligations appears in New York's statutory mortgage form?
Reveal answer
Correct answer: The mortgagor pays the debt and property charges and maintains required fire insurance.
Real Property Law § 258 includes covenants for the mortgagor to pay the indebtedness, taxes, assessments, and water rates and to insure buildings against fire for the mortgagee's benefit.
Question 5 of 40
A New York borrower has made each installment but lets the fire insurance required by the mortgage lapse. Which conclusion is best?
Reveal answer
Correct answer: The borrower may be in default for failing to perform a nonpayment covenant.
Default can involve failure to fulfill a mortgage obligation other than an installment payment. New York's statutory form includes fire-insurance duties.
Question 6 of 40
A mortgage following New York's statutory form covers a parcel with a house and detached garage. The owner plans to demolish the garage. What mortgage-related step does the building-preservation covenant require?
Reveal answer
Correct answer: Obtain the mortgagee's consent before demolition.
The statutory covenant bars removal or demolition of a building on the premises without the mortgagee's consent.
Question 7 of 40
What does acceleration of a mortgage debt mean?
Reveal answer
Correct answer: The remaining debt becomes due before its scheduled maturity under an applicable clause.
Acceleration advances the due date of the remaining debt. Assignment and discharge perform different functions.
Question 8 of 40
After a qualifying default, a lender demands the unpaid balance and later brings a New York foreclosure action. How do these steps differ?
Reveal answer
Correct answer: Acceleration makes the balance due; foreclosure enforces the mortgage lien through court.
Acceleration concerns when the debt is due. New York mortgage foreclosure is a court action enforcing the lien; the demand alone does not transfer ownership.
Question 9 of 40
A purchaser takes title subject to an existing mortgage without assuming the seller's debt. What does this arrangement mean?
Reveal answer
Correct answer: The property remains exposed to the lien, but the purchaser has not personally assumed the debt.
Taking subject to an existing mortgage leaves the lien on the property without itself creating an assumption of the debt by the buyer.
Question 10 of 40
Which feature most directly distinguishes a mortgage assumption from a purchase merely subject to the mortgage?
Reveal answer
Correct answer: The buyer agrees to pay the existing mortgage debt.
An assumption includes the buyer's agreement to pay the existing debt. A lien, deed, and possession can be present in either arrangement.
Question 11 of 40
A buyer assumes a seller's mortgage debt. The seller says this alone proves the lender released the seller. What is the best evaluation?
Reveal answer
Correct answer: Incorrect, because assumption and the lender's release of the original borrower are separate issues.
The buyer's assumption does not by itself establish a lender release of the original borrower. The release must be established separately.
Question 12 of 40
A loan contains an enforceable due-on-sale clause covering a proposed transfer, with no applicable exception. What can that clause permit the lender to do?
Reveal answer
Correct answer: Demand payment of the remaining debt upon the covered transfer.
A due-on-sale clause can permit acceleration when a covered transfer occurs. It does not make the sale itself repayment or change the parties into different legal roles.
Question 13 of 40
Buyer and seller agree that an existing loan will remain in place despite a due-on-sale clause. The lender is not a party to their agreement. Which conclusion is most accurate?
Reveal answer
Correct answer: Their private agreement does not itself eliminate the lender's rights under the clause.
An agreement between buyer and seller does not itself waive a lender's contractual rights. A subject-to label does not settle enforceability of a due-on-sale clause.
Question 14 of 40
What is a principal purpose of recording a mortgage?
Reveal answer
Correct answer: To give constructive notice of the lien and help protect its priority
Recording puts the mortgage in public land records, supplying constructive notice and helping protect priority. It is not payment, a deed, or a guarantee.
Question 15 of 40
A lender transfers its interest in an unpaid mortgage loan to another lender. Which term describes that transfer?
Reveal answer
Correct answer: Assignment of the lender's interest
Assignment transfers the lender's interest. It differs from assumption of debt, discharge through satisfaction, and acceleration of maturity.
Question 16 of 40
Which document records the release of a mortgage after the debt has been fully paid?
Reveal answer
Correct answer: A certificate of discharge or satisfaction
A discharge or satisfaction documents release following payment. A payoff statement identifies what must be paid and does not itself show that payment occurred.
Question 17 of 40
Under New York Real Property Law § 275, within what period must the signer of a discharge certificate arrange to have it presented for recording after giving the certificate for a due and fully paid mortgage?
Reveal answer
Correct answer: Thirty days
Section 275 requires the signer to arrange presentation for recording within thirty days thereafter. Later liability intervals do not extend that duty.
Question 18 of 40
A New York mortgage is due and fully paid, and its discharge certificate has been signed. Who has the duty under § 275 to arrange presentation of that certificate for recording?
Reveal answer
Correct answer: The person signing the discharge certificate
Section 275 places the duty to arrange presentation for recording on the person signing the discharge certificate.
Question 19 of 40
A lender requests presentation of a New York discharge certificate to the recording officer in the county where the mortgage is recorded. Why is that destination appropriate?
Reveal answer
Correct answer: Section 275 directs presentation to the county where the mortgage is recorded.
Real Property Law § 275 directs presentation to the recording officer of the county where the mortgage is recorded.
Question 20 of 40
During a New York refinancing, the existing lender assigns its note and mortgage to a new lender, and a bona fide debt and enforceable lien continue. A seller argues that any lender change requires discharge. Which response is best?
Reveal answer
Correct answer: A continuing debt and lien can be preserved by assignment instead of discharged.
Section 275 recognizes assignments in refinancing and other transactions that preserve a bona fide debt and enforceable lien; a change of lender is not necessarily payoff and discharge.
Question 21 of 40
A closing file contains a lender's payoff statement, but no payment has yet been made. What does the statement establish?
Reveal answer
Correct answer: The amount needed for payoff under the statement's terms
A payoff statement supplies payoff information. Obtaining the statement does not itself pay the debt, discharge the lien, create an assumption, or waive a transfer clause.
Question 22 of 40
A New York borrower says, 'My mortgage agreement requires me to pay property taxes, but I am not in default unless I miss principal or interest.' What is the flaw?
Reveal answer
Correct answer: Failure to fulfill another mortgage obligation can also constitute default.
RPAPL § 1393 defines mortgage default in terms of failure to fulfill mortgage-agreement obligations, not solely missed principal or interest. The statutory mortgage form includes tax covenants.
Question 23 of 40
Why do mortgage covenants commonly address both fire insurance and preservation of buildings?
Reveal answer
Correct answer: They protect the property that serves as security for the debt.
Insurance and building-preservation covenants protect the collateral supporting repayment. They are distinct from the note's debt promise and a future buyer's assumption.
Question 24 of 40
A title search reveals a recorded mortgage. Without payoff or discharge information, what is the most appropriate conclusion?
Reveal answer
Correct answer: The record gives notice of a mortgage interest that requires further review.
Recording gives notice of the mortgage interest. The record alone does not establish the current balance, lender ownership, or a default.
Question 25 of 40
A lender wants to identify the exact real property securing a borrower's debt. Which document's collateral description is most directly relevant?
Reveal answer
Correct answer: The mortgage
The mortgage identifies the property pledged as security. New York's statutory form expressly connects the indebtedness with a description of the mortgaged property.
Question 26 of 40
A borrower needs to check the promised interest rate, installment schedule, and maturity date. Which document should be examined for those repayment terms?
Reveal answer
Correct answer: The promissory note
The note states the borrower's repayment terms, including interest, installments, and maturity.
Question 27 of 40
Under the tax covenant in New York's statutory mortgage form, the mortgagor fails to pay a property assessment. What may the mortgagee do?
Reveal answer
Correct answer: Pay the assessment following the mortgagor's default.
The statutory form says the mortgagor will pay taxes, assessments, and water rates and that, in default, the mortgagee may pay them.
Question 28 of 40
A New York mortgage follows the statutory form's fire-insurance covenant. The borrower fails to insure, and the lender pays a premium to obtain the required insurance. Which obligation does that covenant place on the borrower?
Reveal answer
Correct answer: Reimburse the mortgagee for the premium it paid after the borrower's default.
The statutory fire-insurance covenant requires reimbursement for premiums paid by the mortgagee after the mortgagor's default in maintaining the required insurance or delivering policies.
Question 29 of 40
Two buyers acquire different mortgaged homes. Buyer One takes subject to the loan without assuming it. Buyer Two expressly assumes the loan. Which comparison is correct?
Reveal answer
Correct answer: Both properties can remain subject to liens, but Buyer Two has agreed to pay the existing debt.
The difference concerns the buyer's repayment promise, not whether a mortgage lien can remain. Assumption does not itself discharge the lien or establish release of the seller.
Question 30 of 40
A seller wants evidence that the lender will no longer hold the seller responsible after the buyer assumes the loan. Which document most directly addresses that concern?
Reveal answer
Correct answer: The lender's written release of the original borrower
The lender's release directly addresses the seller's continuing obligation. The deed, appraisal, and recording receipt do not establish that release.
Question 31 of 40
An owner sells mortgaged property, and the sale proceeds fully pay the due loan. Which follow-up most directly addresses the old mortgage in the public record?
Reveal answer
Correct answer: Arrange recording of the mortgage's discharge certificate.
After full payment of a due New York mortgage, the discharge process under § 275 addresses release of that mortgage in the public record.
Question 32 of 40
An investor acquires property subject to a mortgage and later stops making voluntary loan payments. The investor never assumed the debt. Which risk follows from the property's continuing lien?
Reveal answer
Correct answer: The investor can lose the property through enforcement of the lien despite not assuming the debt.
Taking subject to a mortgage does not eliminate the lien. The buyer's lack of an assumption does not shield the property from mortgage enforcement.
Question 33 of 40
Notice attributed to a person because a mortgage is properly recorded in public land records is called what?
Reveal answer
Correct answer: Constructive notice
Proper recording supplies constructive notice. It need not involve proof that someone personally received or read a communication about the lien.
Question 34 of 40
In one transaction, a bank transfers its loan interest to another bank. In a separate transaction, a buyer agrees to repay a seller's existing loan. Which labels correctly describe the two acts?
Reveal answer
Correct answer: First: assignment; second: assumption
Assignment transfers the lender's interest; assumption is the buyer's agreement to pay the existing debt. They operate on different sides of the loan relationship.
Question 35 of 40
A New York owner pays off a mortgage and receives a discharge. The owner says, 'This is when the bank transfers ownership back to me.' Which explanation is best?
Reveal answer
Correct answer: The discharge releases the lien; the mortgage had not transferred ownership to the bank.
In New York, the mortgage is a lien, not a conveyance of ownership to the bank. Discharge releases the mortgage after payoff rather than conveying ownership back.
Question 36 of 40
A note's remaining balance becomes due on the maturity date originally agreed upon. No earlier demand was made. Which description is most accurate?
Reveal answer
Correct answer: The debt reached scheduled maturity rather than being accelerated.
Scheduled maturity is the originally agreed due date. Acceleration advances the due date; arrival of maturity is not itself repayment or discharge.
Question 37 of 40
For whose benefit does New York's statutory mortgage form require the mortgagor to keep the buildings insured against fire?
Reveal answer
Correct answer: The mortgagee as holder of the security interest
The statutory form requires insurance against fire for the benefit of the mortgagee, protecting the lender's interest in the collateral.
Question 38 of 40
A seller has made every installment on time. The proposed sale falls within an enforceable due-on-sale clause, and no exception applies. The seller says current payments prevent the lender from demanding the balance. What is the best response?
Reveal answer
Correct answer: The covered transfer can trigger the clause even though installments are current.
A due-on-sale clause addresses a covered transfer, which is distinct from installment default. Current payments do not eliminate the stipulated transfer trigger.
Question 39 of 40
A New York borrower has fulfilled every obligation under the mortgage agreement, but the property's market value has declined. Which fact would establish the kind of mortgage default defined in RPAPL § 1393?
Reveal answer
Correct answer: Failure to fulfill an obligation under the mortgage agreement
Section 1393 defines mortgage default as failure to fulfill obligations under the mortgage agreement. The other facts do not establish a breach under the stated assumptions.
Question 40 of 40
A trainee proposes this closing summary: 'The payoff statement creates the repayment promise, the note clears the lien, and the discharge estimates the payoff.' Which corrected sequence matches the documents to their functions?
Reveal answer
Correct answer: Note: repayment promise; payoff statement: amount needed to pay; discharge: release of the paid mortgage.
The note establishes the repayment promise, the payoff statement supplies payment information, and the discharge documents release of the paid mortgage. Their functions follow different stages of the loan.
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