Deck 8: Real Estate Foreclosures

Question 1

A property may only be foreclosed on for non-payment.

Answer 1

False

Question 2

Reinstatement and redemption are the same thing.

Answer 2

False

Question 3

The deed given to the high bidder at a foreclosure sale is:

A) a general warranty deed.
B) a trustee's deed.
C) a quitclaim deed.
D) a special warranty deed.

Answer 3

a trustee's deed.

Question 4

A debtor in default might avoid foreclosure by:

A) restructuring the loan with the current lender.
B) giving the lender title via a deed in lieu of foreclosure.
C) obtain financing from another source and pay off the loan.
D) all of the above.

Question 5

Deficiency judgments are:

A) general liens.
B) special liens.
C) allowed in all foreclosures.
D) not allowed in conventional mortgages.

Question 6

What is the term that describes when a debtor (borrower) can prove that the amount in default is inaccurate?

A) Redemption
B) Legal delay
C) Renegotiate with the lender
D) Rescission

Question 7

The trustee in a bankruptcy works for:

A) the lender.
B) the debtor.
C) the debtor and the creditors.
D) the debtor's attorney.

Question 8

When a debtor files for bankruptcy:

A) the lender may proceed with the foreclosure.
B) the lenders are placed under an automatic stay.
C) the bankruptcy judge allows only the senior lien to be foreclosed.
D) the foreclosure continues but the proceeds are placed in trust.

Question 9

The situation in which real property that was used as collateral for a debt is sold to pay the debt is called:

A) redemption.
B) lender adjustments.
C) foreclosure.
D) mortgage loan.

Question 10

Some states allow non-judicial foreclosure. The part of the mortgage contract that allows this is called:

A) the power of sale clause.
B) the submission of collateral clause.
C) the covenant of further assurances clause.
D) the exceptions clause.

Question 11

Under the terms of most private mortgage guarantee insurance policies, a default is interpreted to be nonpayment for:

A) 4 months.
B) 1 month.
C) 6 months.
D) none of the above.

Question 12

In a default of an FHA loan, if the default is beyond the borrower's control but deemed curable:

A) the foreclosure proceeds immediately.
B) there is a forbearance of foreclosure.
C) the foreclosure is required to be judicial rather than non-judicial.
D) the loan is automatically converted to a conventional loan.

Question 13

VA lenders are required to make every effort to help the borrower through:

A) forbearance.
B) payment adjustments.
C) deeds in lieu.
D) all of the above.

Question 14

If a property sells at foreclosure for less than the loan balance:

A) the debtor might face a deficiency judgment.
B) the debtor has no further obligation to the lender.
C) the debtor may redeem the property within the first 24 hours after the sale.
D) the debtor will win a lawsuit based on an inadequate sales price.

Question 15

The option that gives a debtor an opportunity to make up back payments plus any incidental charges and stop the foreclosure is called:

A) the redemption option.
B) the power of sale option.
C) the legal delay option.
D) the reinstatement option.

Question 16

The Rule of 72 states that whatever annual rate of return you receive on your investment will double in the number of years you get when you divide the rate of return into 72. If you invest $1,000 in a CD with a rate of 3%, how many years will it take your money to double to $2,000?

Question 17

Describe a credit bid.

Question 18

How are the monies from a foreclosure sale distributed?

Question 19

What is the main difference between judicial and non-judicial foreclosure?

Question 20

What should you do if you have missed several payments on your mortgage?

Question 21

Discuss the pros and cons of buying property at a foreclosure sale.

Question 22

When faced with foreclosure, a debtor has eight options, as described in the text. Name and discuss six of these options.