Which action is true about a mortgage in real estate financing?

• A. It conveys fee title to the property
• B. It contracts the sale price between buyer and seller
• C. It creates a lien on the property to secure the loan
• D. It guarantees title against all defects

Answer: (C)

A mortgage is a security instrument that gives the lender a lien on the real estate to secure repayment of the loan. The borrower still holds title to the property, but the lender’s lien means the property serves as collateral; if the borrower stops paying, the lender can initiate foreclosure to recover what’s owed. This role as a lien is what distinguishes a mortgage from transferring ownership or setting the sale price. The mortgage does not guarantee that the title is free of defects—that protection comes from title insurance and a title search. Similarly, the sale price between buyer and seller is determined by their agreement and contract, not by the mortgage itself.