Mortgage: 2 parties — borrower (mortgagor) pledges property to lender (mortgagee); judicial foreclosure
Before you read
Test yourself first: 5 questions
Question 1 of 5
In a typical mortgage loan transaction, what is the promissory note?
Answer: A. The promissory note is the borrower's written promise to repay the debt and states the loan amount, interest rate, and repayment terms; the mortgage or deed of trust is the separate instrument that secures it.
Question 2 of 5
Which document creates the lien against the real estate that secures repayment of the promissory note?
Answer: B. The mortgage (or deed of trust) is the security instrument that pledges the property as collateral and creates the lien; the note evidences the debt itself.
Question 3 of 5
A deed of trust involves how many parties?
Answer: C. A deed of trust has three parties: the trustor (borrower), the trustee (holds title), and the beneficiary (lender). A mortgage has two.
Question 4 of 5
A deed of trust differs from a regular mortgage primarily because it involves how many parties?
Answer: C. A deed of trust is a three-party instrument involving the trustor (borrower), the beneficiary (lender), and a neutral trustee who holds title until the debt is paid; a standard mortgage involves only mortgagor and mortgagee.
Question 5 of 5
A defeasance clause in a mortgage provides that:
Answer: B. A defeasance clause requires the lender to defeat (release) its claim to the property and return clear title once the borrower satisfies the debt; in a deed of trust this is done through reconveyance.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Promissory note: the IOU — evidence of the debt, makes you personally liable
- Mortgage: 2 parties — borrower (mortgagor) pledges property to lender (mortgagee); judicial foreclosure
- Deed of trust: 3 parties — trustor (borrower), beneficiary (lender), trustee holds title; non-judicial power of sale
- Hypothecation: pledge property as collateral WITHOUT giving up possession
- Exam cue: '-or' gives (borrower), '-ee' receives (lender)
Note vs Mortgage vs Deed of Trust: FAQs
Is Note vs Mortgage vs Deed of Trust on the real estate exam?
Yes. Financing & Lending is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
