medium · National Real Estate Exam financing
A buyer signs a contract to purchase a property 'subject to' the existing mortgage. The buyer later defaults on the payments.
What is the lender's primary recourse?
- Sue the buyer personally for the remaining balance of the loan.
- Foreclose on the property but they are barred from pursuing the seller for any shortfall.
- Foreclose on the property and seek a deficiency judgment against the original seller.
- The lender cannot foreclose because the transfer of the property violated the due-on-sale clause.
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