medium · National Real Estate Exam financing
A homeowner who is severely underwater on their mortgage decides to pursue a deed in lieu of foreclosure.
What is the primary disadvantage for the lender when accepting this arrangement compared to completing a formal foreclosure process?
- The borrower retains the statutory right of redemption for up to one year.
- The lender takes the property subject to any existing junior liens.
- The process is significantly more expensive and time-consuming than a judicial foreclosure.
- The lender is legally barred from pursuing a deficiency judgment in all jurisdictions.
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