In a lien theory state, what does the lender hold?

• A. Title
• B. Lien
• C. Mortgage
• D. Deed of Trust

Answer: (B)

In a lien theory state, the borrower keeps the title to the property and the lender holds a lien as security for the loan. The lien is a legal claim against the property that allows the lender to foreclose if the borrower defaults, without the lender owning the property. The mortgage typically creates that security interest, while a deed of trust is a different mechanism used in some states. So the lender’s interest is best described as a lien on the property.