medium · National Real Estate Exam financing
A property is sold with a $250,000 mortgage. The buyer takes title 'subject to' the mortgage.
If the property value increases to $350,000 and the buyer defaults, what happens to the $100,000 in equity?
- It belongs to the buyer, provided it remains after the foreclosure sale and all liens are paid.
- It is automatically forfeited to the lender as a penalty for default.
- It is split 50/50 between the buyer and the seller under the doctrine of shared appreciation.
- It must be returned to the original seller because the buyer was never personally liable.
Sign up free to see the explanation and track your rank →
More National Real Estate Exam financing practice
- A borrower has a mortgage where the monthly payments are not… — This scenario is known as:
- An FHA loan requires the borrower to pay which type of insurance premium?
- If a borrower fails to make payments and the lender invokes the 'due-on-sale' clause becau
- In a state following 'lien theory,' who holds the legal title to the property while the lo
- What happens to Private Mortgage Insurance (PMI) under the Homeowners Protection Act when
- What is the primary function of the security instrument in a real estate loan?
- What is the specific purpose of the 'acceleration clause' in a mortgage?
- A borrower fails to make three consecutive mortgage payments… — Which clause in the promis