Nationwide Mortgage Licensing System (NMLS) Practice Exam

Which of the following is NOT an involuntary lien?

1. IRA lien

2. Judgment lien

3. Mortgage lien

4. Mechanic's lien

The correct answer is: Mortgage lien

Involuntary liens are legal claims against a property that are imposed without the consent of the property owner, typically as a result of a legal proceeding or statutory authority. In contrast, a voluntary lien arises from an agreement or contract between the property owner and a lender or creditor. A mortgage lien is a voluntary lien because it is created when a borrower agrees to use their property as collateral for a loan. The borrower willingly enters into this agreement, which stipulates the terms under which they can borrow money and use their property as security for that loan. On the other hand, judgment liens, mechanic's liens, and even an IRA lien (depending on context) are categorized as involuntary liens. A judgment lien occurs when a court grants a creditor a legal claim against a debtor’s property following a court ruling. A mechanic's lien may be placed on a property by a contractor or supplier who has provided work or materials but has not been compensated. An IRA lien, depending on the context, could refer to claims derived from debts or obligations related to an individual retirement account, which would not be voluntary. Thus, identifying a mortgage lien as a voluntary lien clarifies that it is not an involuntary lien, making it the correct answer in this scenario.