Question 1

All states permit foreclosure sales.

Accepted Answer

A) True 
 B)False

Question 2

A deficiency judgment is one for the amount of a debt in excess of the value of any collateral.

Accepted Answer

A) True 
 B)False

Question 3

The concept of a deficiency judgment applies to:

Accepted Answer

A)  secured debt only 
B)  unsecured debt only 
C)  both secured and unsecured debt 
D)  neither secured nor unsecured debt 
A)  secured debt only 
B)  unsecured debt only 
C)  both secured and unsecured debt 
D)  neither secured nor unsecured debt

Question 4

A mechanic's lien can be obtained on real property by a contractor who has not been paid and who has:

Accepted Answer

A)  provided materials used on the real property 
B)  provided labor on the real property 
C)  provided materials used on the real property or labor on the real property 
D)  provided materials or labor used on personal property that was located on the real property at the time of providing the materials or labor 
E)  C and D 
A)  provided materials used on the real property 
B)  provided labor on the real property 
C)  provided materials used on the real property or labor on the real property 
D)  provided materials or labor used on personal property that was located on the real property at the time of providing the materials or labor 
E)  C and D

Question 5

Jack has a construction company that specializes in home remodeling and renovation.He enters into a contract with Sandra to remodel her basement.Sandra agrees to pay in three installments,the third of which is due at the time of completion.Sandra makes the first two payments on schedule but refuses to make the final one even though the job has been completed.To preserve his rights,Jack files against the property.What type of filing has Jack most likely done?

Accepted Answer

A)  a mechanic's lien 
B)  a mortgage 
C)  a deed of trust 
D)  a deficiency judgment 
E)  a foreclosure 
A)  a mechanic's lien 
B)  a mortgage 
C)  a deed of trust 
D)  a deficiency judgment 
E)  a foreclosure

Question 6

An improperly recorded document is still effective against the purchasers of real property.

Accepted Answer

A) True 
 B)False

Question 7

A deed of trust is an instrument that evidences the borrower's debt to the lender.

Accepted Answer

A) True 
 B)False

Question 8

The process by which a lender uses the secured property to satisfy a debt in default is called:

Accepted Answer

A)  enactment 
B)  deed entrustment 
C)  lien release 
D)  recording 
E)  foreclosure 
A)  enactment 
B)  deed entrustment 
C)  lien release 
D)  recording 
E)  foreclosure

Question 9

A land sales contract is often referred to as "carrying the paper."

Accepted Answer

A) True 
 B)False

Question 10

Under a land sales contract,which of the following is true?

Accepted Answer

A)  A third-party lender provides financing for the purchase of a piece of property. 
B)  Credit is extended directly by the seller to the buyer,with the buyer not receiving a deed from the seller until the debt obligation is fully satisfied. 
C)  Credit is extended directly by the seller to the buyer,with the buyer receiving a deed immediately and that will become null and void upon default. 
D)  Land is sold that will not involve the use of a mortgage or deed of trust. 
A)  A third-party lender provides financing for the purchase of a piece of property. 
B)  Credit is extended directly by the seller to the buyer,with the buyer not receiving a deed from the seller until the debt obligation is fully satisfied. 
C)  Credit is extended directly by the seller to the buyer,with the buyer receiving a deed immediately and that will become null and void upon default. 
D)  Land is sold that will not involve the use of a mortgage or deed of trust.

Question 11

How are mortgages and deeds of trust related to one another?

Accepted Answer

A)  They are two different methods to give a lender a security interest in real property of the debtor. 
B)  They are two names for the same instrument,and thus can be used interchangeably. 
C)  They are two distinct aspects of a security agreement covering real property,both of which must be present for the security interest to be valid. 
D)  Mortgages are used for real property,and deeds of trust are used for personal property. 
E)  Mortgages are used to create a security agreement covering residential real property,and deeds of trust are used in connection with commercial real property. 
A)  They are two different methods to give a lender a security interest in real property of the debtor. 
B)  They are two names for the same instrument,and thus can be used interchangeably. 
C)  They are two distinct aspects of a security agreement covering real property,both of which must be present for the security interest to be valid. 
D)  Mortgages are used for real property,and deeds of trust are used for personal property. 
E)  Mortgages are used to create a security agreement covering residential real property,and deeds of trust are used in connection with commercial real property.

Question 12

Which of the following is a two-party instrument?

Accepted Answer

A)  deed of trust 
B)  mortgage 
C)  both a deed of trust and a mortgage 
D)  neither a deed of trust nor a mortgage 
A)  deed of trust 
B)  mortgage 
C)  both a deed of trust and a mortgage 
D)  neither a deed of trust nor a mortgage

Question 13

A deficiency in connection with a foreclosure is a determination that the debtor is in default.

Accepted Answer

A) True 
 B)False

Question 14

Sharon borrowed $200,000 in order to purchase a home.She entered into a mortgage agreement with the lender,but the lender never recorded the mortgage.Sharon then borrowed additional money from a second lender and executed a mortgage,which the second lender recorded.Which of the following is true?

Accepted Answer

A)  The first lender cannot enforce its mortgage against Sharon. 
B)  The rights of the second lender will be determined without regard to the mortgage of the first lender. 
C)  Neither mortgage is enforceable. 
D)  The recording of the second mortgage ahead of the first caused the second to be invalid. 
E)  Sharon will be unable to sell the home until all valid mortgages against it are properly recorded. 
A)  The first lender cannot enforce its mortgage against Sharon. 
B)  The rights of the second lender will be determined without regard to the mortgage of the first lender. 
C)  Neither mortgage is enforceable. 
D)  The recording of the second mortgage ahead of the first caused the second to be invalid. 
E)  Sharon will be unable to sell the home until all valid mortgages against it are properly recorded.

Question 15

A second mortgage holder has no rights of redemption if the property goes into foreclosure.

Accepted Answer

A) True 
 B)False

Question 16

If the non-recordation of a mortgage or deed of trust does not affect either the legality of the instrument between the mortgagor and the mortgagee or the rights and obligations of the parties,then why bother having a recording statute?

Accepted Answer

The recording of a mortgage or deed give

Question 17

Secured credit refers to credit where there is a second party to pay the debt in the event that the original debtor does not.

Accepted Answer

A) True 
 B)False

Question 18

What is a mortgage?

Accepted Answer

A)  a loan to purchase a house or other real property 
B)  a contract to purchase a house or other real property 
C)  any loan associated with real property 
D)  a security agreement in which real property is pledged as collateral for the related debt 
A)  a loan to purchase a house or other real property 
B)  a contract to purchase a house or other real property 
C)  any loan associated with real property 
D)  a security agreement in which real property is pledged as collateral for the related debt

Question 19

If a borrower fails to repay the loan,the responsibility of a third-party to pay it back is called a surety arrangement.

Accepted Answer

A) True 
 B)False

Question 20

What is a "power of sale" in connection with a mortgage?

Accepted Answer

A)  It is a statute allowing the secured property to be sold in order to satisfy the related debt if it is not paid according to the stated terms. 
B)  It is a provision in a mortgage or deed of trust that allows a foreclosure process that does not involve court action. 
C)  It is a provision in a mortgage or deed of trust that allows the borrower to sell the property even though the loan associated with the mortgage has not been paid off. 
D)  It is the general principle that a mortgage or deed of trust cannot take away the borrower's legal right to sell property whether or not there is a security interest associated with it. 
A)  It is a statute allowing the secured property to be sold in order to satisfy the related debt if it is not paid according to the stated terms. 
B)  It is a provision in a mortgage or deed of trust that allows a foreclosure process that does not involve court action. 
C)  It is a provision in a mortgage or deed of trust that allows the borrower to sell the property even though the loan associated with the mortgage has not been paid off. 
D)  It is the general principle that a mortgage or deed of trust cannot take away the borrower's legal right to sell property whether or not there is a security interest associated with it.

Exam 26: Creditor's and Debtor's Rights

All states permit foreclosure sales.

A deficiency judgment is one for the amount of a debt in excess of the value of any collateral.

The concept of a deficiency judgment applies to:

A mechanic's lien can be obtained on real property by a contractor who has not been paid and who has:

An improperly recorded document is still effective against the purchasers of real property.

A deed of trust is an instrument that evidences the borrower's debt to the lender.

The process by which a lender uses the secured property to satisfy a debt in default is called:

A land sales contract is often referred to as "carrying the paper."

Under a land sales contract,which of the following is true?

How are mortgages and deeds of trust related to one another?

Which of the following is a two-party instrument?

A deficiency in connection with a foreclosure is a determination that the debtor is in default.

Sharon borrowed $200,000 in order to purchase a home.She entered into a mortgage agreement with the lender,but the lender never recorded the mortgage.Sharon then borrowed additional money from a second lender and executed a mortgage,which the second lender recorded.Which of the following is true?

A second mortgage holder has no rights of redemption if the property goes into foreclosure.

If the non-recordation of a mortgage or deed of trust does not affect either the legality of the instrument between the mortgagor and the mortgagee or the rights and obligations of the parties,then why bother having a recording statute?

Secured credit refers to credit where there is a second party to pay the debt in the event that the original debtor does not.

What is a mortgage?

If a borrower fails to repay the loan,the responsibility of a third-party to pay it back is called a surety arrangement.

What is a "power of sale" in connection with a mortgage?

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