What is the legal document that pledges a property to the lender as security for a debt?

What is the legal document that pledges a property to the lender as security for a debt?

• A. Promissory Note
• B. Mortgage
• C. Deed of Trust
• D. Loan Agreement

Answer: (B)

The mortgage is the legal document that pledges a property to the lender as security for a debt. This contract establishes the lender's right to take possession of the property through foreclosure if the borrower fails to meet the repayment terms. In a mortgage agreement, the borrower conveys a security interest in the property to the lender, which means that the property serves as collateral for the loan. In contrast, a promissory note is the document that contains the borrower's promise to repay the loan, detailing the loan amount, interest rate, and repayment terms, but it does not involve the security of the property itself. A deed of trust serves a similar purpose as a mortgage, but it involves a third party, known as a trustee, who holds the title until the loan is paid off. A loan agreement typically outlines the terms of the loan but may not specifically address the security for that loan in relation to the property. Thus, the mortgage is the definitive document that secures the property as collateral for the debt.

The mortgage is the legal document that pledges a property to the lender as security for a debt. This contract establishes the lender's right to take possession of the property through foreclosure if the borrower fails to meet the repayment terms. In a mortgage agreement, the borrower conveys a security interest in the property to the lender, which means that the property serves as collateral for the loan.

In contrast, a promissory note is the document that contains the borrower's promise to repay the loan, detailing the loan amount, interest rate, and repayment terms, but it does not involve the security of the property itself. A deed of trust serves a similar purpose as a mortgage, but it involves a third party, known as a trustee, who holds the title until the loan is paid off. A loan agreement typically outlines the terms of the loan but may not specifically address the security for that loan in relation to the property. Thus, the mortgage is the definitive document that secures the property as collateral for the debt.