Mr.Hoo granted a first mortgage on his property to Vancouver Trust as security for a loan of $110 000 and a second mortgage to Hong Kong Bank as security for a loan of $25 000.Which of the following statements is false?
A)If Hoo were to default on his first mortgage,Vancouver Trust could start the foreclosure process.
B)If Hoo were to default on his first mortgage and the property was sold under court order,the proceeds from that sale would go first to Vancouver Trust,second to Hong Kong Bank,and the remainder,if any,to Hoo.
C)If Hoo were to default on his second mortgage only and the second mortgagee foreclosed,then the first mortgagee and Hoo himself would lose their interests in the property.
D)Hoo has given the fee simple interest in his property to Vancouver Trust; he has given Hong Kong Bank only his equity of redemption.
E)If Hoo were to default on his first mortgage,his creditors could ask that the court order the property to be sold to avoid foreclosure.

Question

Quizplus · Accepted Answer

If Hoo were to default on his second mortgage only and the second mortgagee (Hong Kong Bank) foreclosed, the first mortgagee (Vancouver Trust) and Hoo himself would still have their interests in the property. The second mortgagee (Hong Kong Bank) would only be entitled to the proceeds from the sale up to the amount of their outstanding debt ($25,000), and any remaining proceeds would go to the first mortgagee (Vancouver Trust), and then to Hoo. Therefore, statement C is false.

MrHoo Granted a First Mortgage on His Property to Vancouver