Under intermediate title theory, when does the mortgagee gain legal title?

• A. Upon loan origination
• B. Upon mortgagor's default
• C. Upon execution of the mortgage
• D. At foreclosure

Answer: (B)

Under intermediate title theory, the mortgage is treated mainly as a security device rather than an outright transfer of ownership. The borrower keeps title and possession during the loan term, and the lender’s right to legal title arises only if the borrower defaults. When default occurs, the mortgagee’s interest becomes enforceable and legal title can attach to secure the debt. So the moment the mortgagor defaults is when the mortgagee gains legal title. If title passed at loan origination or execution, that would belong to a title theory, and if it happened only at foreclosure, that would reflect foreclosure rather than the trigger under the intermediate approach.