Question 1

Qian resides in a state that has a $50,000 homestead exemption. She defaults on a loan extended by Rely Bank, owing $60,000. Her home is sold at auction for $90,000. The creditor is entitled to

Accepted Answer

A)  0) 
B)  $30,000.
C)  $50,000.
D)  $60,000. C

Question 2

Building Company adds a shipping dock to the property of Corporate Complex, but the owner does not pay. Building files a lien on Corporate's property. The property

Accepted Answer

A)  can be held to guarantee payment of the debt.
B)  must be sold to provide payment of the debt.
C)  must be returned to the debtor within a certain period of time.
D)  none of the choices. A

Question 3

A small-amount mechanic's lien typically stays on record until the property against which it has been filed is sold when it is paid out of the sale proceeds.

Accepted Answer

A) True 
 B)False  True

Question 4

Recording a mortgage ensures that the creditor is officially on record as holding an interest in the property.

Accepted Answer

A) True 
 B)False

Question 5

The borrower need not obtain the lender's permission for a short sale.

Accepted Answer

A) True 
 B)False

Question 6

On a debtor's default, to ensure that the debtor will retain some form of shelter, most familiarly exempt from execution or attachment by an unsecured creditor is the value of

Accepted Answer

A)  collateral possessed by the creditor.
B)  a family home to a specified amount.
C)  non-collateral possessed by the debtor.
D)  non-exempt property.

Question 7

Ranch West owes Silo & Barn Inc. $5,000 on their contract, but refuses to pay. To collect, Silo files a mechanic's lien, under which security for the debt is represented by

Accepted Answer

A)  Ranch's personal property.
B)  Ranch's real estate.
C)  the $5,000 owed on the contract.
D)  property held by a third party.

Question 8

To purchase an apartment, Les borrows funds from Metro Bank. The terms of the loan give the lender a lien on the property being acquired by the borrower as security for payment of the debt. This is

Accepted Answer

A)  a mortgage.
B)  a foreclosure.
C)  a short sale.
D)  a workout agreement.

Question 9

To buy a ranch house, Frieda obtains a mortgage loan from Grove Loans LLC. Later, Frieda informs Grove that she may default on the payments. The lender agrees to delay taking possession of the property and selling it. The parties negotiate a payment plan for the amount due on the loan. This is

Accepted Answer

A)  forbearance.
B)  a short sale.
C)  a workout agreement.
D)  a foreclosure.

Question 10

To buy a condo, Mary obtains a thirty-year mortgage with an interest rate that is fixed for three years and then adjusts annually. Mary's mortgage is

Accepted Answer

A)  a fixed-rate mortgage.
B)  an adjustable-rate mortgage.
C)  a workout agreement.
D)  a short sale.

Question 11

South Bank lends funds to Trucking Corporation to add a maintenance garage to Trucking's property. Payment of the loan is guaranteed by the building. The law covering this transaction is provided by

Accepted Answer

A)  local building ordinances.
B)  state shipping regulations.
C)  federal banking rules.
D)  the Uniform Commercial Code.

Question 12

Personal property that is most often exempt from satisfaction of a creditor's judgment debt on a debtor's default, up to a specified amount, includes

Accepted Answer

A)  certain classified animals, usually including livestock.
B)  equipment used in a business or trade, such as tools.
C)  all of the choices.
D)  a vehicle for transportation.

Question 13

A lender can require a borrower to maintain the property in such a way that the lender's investment is protected.

Accepted Answer

A) True 
 B)False

Question 14

Generally, any defenses available to a principal debtor cannot be used by a surety or guarantor to avoid liability on the obligation to the creditor.

Accepted Answer

A) True 
 B)False

Question 15

To buy a home, Lois pays part of the purchase price up front in cash and borrows the rest of the funds from Members Credit Union. The part of the purchase price paid up front is

Accepted Answer

A)  a down payment.
B)  a short sale.
C)  a prepayment penalty.
D)  a mortgage.

Question 16

Kari is a surety for Lore's loan from Metro Bank. As a surety, Kari's right of reimbursement entitles her to receive from the debtor

Accepted Answer

A)  any right that the creditor had against the debtor.
B)  a proportionate share of any overpayment due to the loan's prepayment.
C)  all outlays made on behalf of the suretyship arrangement.
D)  title to and possession of the property serving as collateral for the loan.

Question 17

The rate of interest paid by the borrower stays fixed with an adjustable-rate mortgage .

Accepted Answer

A) True 
 B)False

Question 18

A prepayment penalty clause helps to protect the borrower should the lender sell the loan within a short time after issuing a mortgage.

Accepted Answer

A) True 
 B)False

Question 19

Ari obtains a mortgage loan from Bayside Bank so that he can buy a house. The house costs $200,000. Ari makes a down payment of $20,000. Based on the amount of the price paid up front, Bayside will likely require Ari to

Accepted Answer

A)  obtain mortgage insurance.
B)  record the mortgage loan.
C)  agree to a prepayment penalty clause.
D)  pay all claims against the property.

Question 20

Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Roma, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. The guaranty is required to be in writing because

Accepted Answer

A)  the debtor has a right of redemption.
B)  the co-signer has a right of contribution.
C)  the main purpose rule applies.
D)  the main purpose rule does not apply.

Exam 29: Creditors Rights and Remedies

Qian resides in a state that has a $50,000 homestead exemption. She defaults on a loan extended by Rely Bank, owing $60,000. Her home is sold at auction for $90,000. The creditor is entitled to

Building Company adds a shipping dock to the property of Corporate Complex, but the owner does not pay. Building files a lien on Corporate's property. The property

A small-amount mechanic's lien typically stays on record until the property against which it has been filed is sold when it is paid out of the sale proceeds.

Recording a mortgage ensures that the creditor is officially on record as holding an interest in the property.

The borrower need not obtain the lender's permission for a short sale.

On a debtor's default, to ensure that the debtor will retain some form of shelter, most familiarly exempt from execution or attachment by an unsecured creditor is the value of

Ranch West owes Silo & Barn Inc. $5,000 on their contract, but refuses to pay. To collect, Silo files a mechanic's lien, under which security for the debt is represented by

To purchase an apartment, Les borrows funds from Metro Bank. The terms of the loan give the lender a lien on the property being acquired by the borrower as security for payment of the debt. This is

To buy a ranch house, Frieda obtains a mortgage loan from Grove Loans LLC. Later, Frieda informs Grove that she may default on the payments. The lender agrees to delay taking possession of the property and selling it. The parties negotiate a payment plan for the amount due on the loan. This is

To buy a condo, Mary obtains a thirty-year mortgage with an interest rate that is fixed for three years and then adjusts annually. Mary's mortgage is

South Bank lends funds to Trucking Corporation to add a maintenance garage to Trucking's property. Payment of the loan is guaranteed by the building. The law covering this transaction is provided by

Personal property that is most often exempt from satisfaction of a creditor's judgment debt on a debtor's default, up to a specified amount, includes

A lender can require a borrower to maintain the property in such a way that the lender's investment is protected.

Generally, any defenses available to a principal debtor cannot be used by a surety or guarantor to avoid liability on the obligation to the creditor.

To buy a home, Lois pays part of the purchase price up front in cash and borrows the rest of the funds from Members Credit Union. The part of the purchase price paid up front is

Kari is a surety for Lore's loan from Metro Bank. As a surety, Kari's right of reimbursement entitles her to receive from the debtor

The rate of interest paid by the borrower stays fixed with an adjustable-rate mortgage .

A prepayment penalty clause helps to protect the borrower should the lender sell the loan within a short time after issuing a mortgage.

Ari obtains a mortgage loan from Bayside Bank so that he can buy a house. The house costs $200,000. Ari makes a down payment of $20,000. Based on the amount of the price paid up front, Bayside will likely require Ari to

Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Roma, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. The guaranty is required to be in writing because