Multistate Bar Examination Practice Question

Under the lien theory of mortgages, the mortgage creates a lien on the property, which gives the lender the right to force the sale of the property if the borrower defaults. However, legal title remains with the borrower unless and until foreclosure occurs. This theory contrasts with the title theory, where legal title is transferred to the lender until the debt is fully repaid, and the borrower retains only equitable title. For incorrect answers, the lender does not receive legal title in lien theory (as in title theory), and the borrower does not lose ownership or transfer title outright upon default or execution of the mortgage.