Pam sells to Rob property which has a $50,000 mortgage in favor of First Bank. Rob purchases the property subject to the mortgage. The value of the property declines and there is a default on the mortgage. When First Bank forecloses, the property sells for only $30,000.
a. Can First Bank recover the $20,000 balance from Rob? Explain.
b. Can First Bank recover the $20,000 from Pam? Explain.

Question

Pam sells to Rob property which has a $50,000 mortgage in favor of First Bank. Rob purchases the property subject to the mortgage. The value of the property declines and there is a default on the mortgage. When First Bank forecloses, the property sells for only $30,000. 
a. Can First Bank recover the $20,000 balance from Rob? Explain. 
b. Can First Bank recover the $20,000 from Pam? Explain.

Quizplus · Accepted Answer

The Answer of Pam sells to Rob property which has a $50,000 mortgage in favor of First Bank. Rob purchases the property subject to the mortgage. The value of the property declines and there is a default on the mortgage. When First Bank forecloses, the property sells for only $30,000. 
a. Can First Bank recover the $20,000 balance from Rob? Explain. 
b. Can First Bank recover the $20,000 from Pam? Explain.

Pam Sells to Rob Property Which Has a $50,000 Mortgage