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Question 1
What is the primary difference between a mortgage and a deed of trust in Texas?
Answer: A mortgage involves two parties (borrower and lender), while a deed of trust involves three parties: the borrower (trustor), the lender (beneficiary), and a neutral third party (trustee) who holds legal title.
Question 2
What document in a real estate loan transaction represents the borrower's personal promise to repay the debt?
Answer: The promissory note (also called a mortgage note) is the borrower's written, legally binding promise to repay the loan under specified terms.
Question 3
What is a 'deficiency judgment' in the context of mortgage foreclosure?
Answer: A deficiency judgment is a court order requiring a borrower to pay the difference between the foreclosure sale price and the remaining balance owed on the loan when the sale proceeds are insufficient.
Question 4
What is the legal term for the clause in a mortgage or deed of trust that allows the lender to demand full repayment if the property is sold or transferred?
Answer: The due-on-sale clause (also called an alienation clause) requires the entire loan balance to be paid upon sale or transfer of the property.
Question 5
What does an 'acceleration clause' in a mortgage allow the lender to do?
Answer: An acceleration clause allows the lender to declare the entire remaining loan balance immediately due and payable if the borrower defaults on any loan term.