John sells to Beth property which has a $150,000 mortgage in favor of Avco Bank. Beth purchases the property subject to the mortgage. The value of the property declines and there is a default on the mortgage. When Avco Bank forecloses, the property sells for only $130,000.
a. Can Avco Bank recover the $20,000 balance from Beth ? Explain.
b. Can Avco Bank recover the $20,000 from John ? Explain.

Question

John sells to Beth property which has a $150,000 mortgage in favor of Avco Bank. Beth purchases the property subject to the mortgage. The value of the property declines and there is a default on the mortgage. When Avco Bank forecloses, the property sells for only $130,000. 
a. Can Avco Bank recover the $20,000 balance from Beth ? Explain. 
b. Can Avco Bank recover the $20,000 from John ? Explain.

Quizplus · Accepted Answer

The Answer of John sells to Beth property which has a $150,000 mortgage in favor of Avco Bank. Beth purchases the property subject to the mortgage. The value of the property declines and there is a default on the mortgage. When Avco Bank forecloses, the property sells for only $130,000. 
a. Can Avco Bank recover the $20,000 balance from Beth ? Explain. 
b. Can Avco Bank recover the $20,000 from John ? Explain.

John Sells to Beth Property Which Has a $150,000 Mortgage