Financing, Mortgages, and Settlement
The debt and the security instrument
The promissory note is the promise to pay; the mortgage or deed of trust is the security instrument that makes the property collateral (hypothecation - the borrower keeps possession, the lender gets a lien). In lien-theory states such as Nebraska the lender does not take title; the borrower retains title subject to the lien. Foreclosure in Nebraska is generally judicial, though deeds of trust with a power of sale are also used, and statutory redemption rights may apply.
Clauses to know. Acceleration, due-on-sale, prepayment penalty, escrow/impound, late charge, defeasance, and the power-of-sale clause in a deed of trust.
Priority. First recorded, first in right, subject to recording-act rules; purchase-money mortgages typically get priority over earlier judgment liens against the buyer, and subordination agreements can reorder liens. Foreclosure extinguishes junior liens but leaves senior liens in place - the foreclosure buyer takes subject to them.
Consumer rules. RESPA Section 8 bars kickbacks and unearned referral fees. Under TRID, the Loan Estimate goes to the borrower within three business days of application, and the Closing Disclosure at least three business days before consummation. Regulation Z covers ability-to-repay, high-cost loans, and escrow requirements.
Numbers. PITI, loan-to-value, discount points vs. origination fees, PMI, amortization, and adjustable-rate features. Nebraska also imposes a documentary stamp tax on deeds, commonly stated at $2.25 per $1,000 of consideration, typically paid by the grantor.
Worked example
A $300,000 purchase with $60,000 down gives a $240,000 loan and an 80% LTV - generally avoiding PMI on a conventional loan. Closing costs paid by the buyer at settlement reduce cash to close, not the sales price.
Rule of thumb: the note creates the obligation; the security instrument creates the lien; recording fixes priority.