Exam 31: Mortgages Foreclosures After the Recession

Darwin borrows $200,000 from Evermore Bank to buy a home. Less than six months into the term, Darwin stops making payments on the loan. To initiate the process to repossess and auction off the property securing the loan, Evermore must

Reed borrows $150,000 from Suburban Credit Union to buy a home, which secures the loan. Three years later, Reed stops making payments on the loan. After Suburban Credit repossesses and auctions off the property to Tyler, equity remains. This amount most likely belongs to

A deficiency judgment requires a borrower to pay the amount of debt remaining after the collateral is sold.

Fact Pattern 31-1A 24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people, including Benny, who could not easily obtain credit under other loan programs. -Refer to Fact Pattern 31-1A. 24-Hour Credit assigns Benny's loan to Consolidated Mortgage Investment Corporation. For most purposes, Consolidated

The loan that a lender provides to enable a borrower to purchase real property is a mortgage.

Fact Pattern 31-1A 24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people, including Benny, who could not easily obtain credit under other loan programs. -Refer to Fact Pattern 31-1A. Under federal law, disclosures with respect to one of 24-Hour Credit's loans must be provided

Main Street Lenders, Inc., attempts to coerce Nolan-who specializes in determining the value of real and personal property-into misstating the value of a property on which a loan is to be issued. This is

Home equity is the portion of a home's value that is "paid off."

A fixed-rate mortgage is a standard mortgage with a rate of interest that changes periodically.

A reverse mortgage starts as a fixed-rate mortgage and then converts into an adjustable-rate mortgage.

Property Financial Corporation makes loans that qualify, under a Federal Reserve Board amendment to Regulation Z, as Higher-Priced Mortgage Loans (HPMLs). Quinn applies to Property Financial for an HPML. To make the loan, the lender must

Borrowers are required to recite the terms of their loans in clear, readily understandable language so that lenders can make rational choices.

Federal mortgage disclosure requirements apply to the written materials that a lender provides and to any oral representations.

Brendan borrows $150,000 from Countywide Credit Union to buy a home. The loan is a fixed-rate mortgage at 5.5 percent with a thirty-year term secured by Brendan's home, which is his principal residence. When Brendan has paid off $10,000 of the mortgage-still owing $140,000-he loses his job and defaults on the loan. The market for homes has declined since Brendan took out the loan, and the value of the home at the time of default is $100,000. Despite the default, Brendan assures Countywide that he has accepted a new position, which will begin in six months. What are Brendan's options to recover the amount still owed on the mortgage Which option would most benefit these parties Why

With an adjustable-rate mortgage, the rate of interest paid by the borrower changes periodically.

Due to a lower default rate, lenders charge a lower interest rate for subprime loans.

Ruth owns a home on which she has two mortgages provided by Security Bank. Town Refinance Inc. tells Ruth that it can refinance the loans to reduce her payments. Town Refinance provides all of the required documents, which accurately state the payments under the new loan as higher. Ruth does not read the documents. Town Refinance is most likely liable for

Rita borrows $30,000 from South State Credit Union. South State accepts Rita's equity in her home as collateral, which can be seized if the loan is not repaid on time. This is

Jaime buys a home by paying part of the purchase price up front in cash and borrowing the rest of the funds from Valley Credit Union. The part of the price paid up front in cash is

Velma borrows $110,000 from Watershed Bank to buy a home. If she fails to make payments on the mortgage, the bank has the right to repossess and auction off the property securing the loan. This is