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RE Ch 6 Q&A
Real Estate Q&As for Chapter 6
| Question | Answer |
|---|---|
| What are the three types for foreclosure processes to enforce mortgage liens? | Judicial, non-judicial, strict |
| What does a foreclosure suit as the court to do? | terminate the defendant's interests in the property, order the property sold publicly to the highest bidder, and order the proceeds applied to the debt |
| What happens to a foreclosure if reinstatement occurs? | The lender must dismiss the suit and the mortgage continues in effect as if it had not been undertaken. |
| What basically happens in a foreclosure? | Lienors force a property owner to give up title. This may involve either the lienors' forcing the owner to sell and pay off the creditors, or taking title directly. |
| What are the basic differences between the three types of foreclosure? | Judicial foreclosure: sale under court supervision; Non-judicial foreclosure: sale without court supervision; Strict foreclosure: no sale; immediate transfer to lienholder. |
| What happens during a judicial/sheriff's sale? | all parties are notified in writing of the sale; the sale is advertised in a newspaper with general circulation; the property is sold to the highest bidder |
| What does the winning bidder of a judicial sale receive? | A certificate of sale, not a deed. The person holding the certificate will receive a sheriff's deed only after the sale has been confirmed. |
| What is the order of payment in a foreclosure? | 1. the cost of the sale 2. any special assessment taxes and general (or ad valorem) taxes 3. the FIRST mortgage 4. whatever is recorded next. 5. Any remaining money goes to the borrower |
| What is the purpose of a deficiency judgment? | It enables a lienor to attach the personal and real property of a lienee when the foreclosure sale has not produced enough funds to pay what the lienor is owed. |
| What is the procedure for a strict foreclosure? | 1. the lender must give appropriate notice to the delinquent borrower 2. the lender prepares and records the paperwork3. After a prescribed period, the lender files suit in court 4. The court orders the borrower to pay the mortgage debt by a certain date. |
| What happens if the debt is not paid in full by the deadline in a strict foreclosure? | the court orders transfer of full legal title to the lender, and the lender gains title with no obligation to sell the property |
| What are other avoidance options? | refinancing, loan workout, bankruptcy |
| What are Kentucky's foreclosure laws? | lien theory state; lenders go to court for a judicial foreclosure; KY does have a restricted statutory right of redemption; deficiency judgements are legal |
| What power does a lender have if a mortgagor defaults in a state that allows non-judicial foreclosure and the mortgage document includes a "power of sale" clause? | The lender can give the borrower notice of the default and a chance to cure it, after which the lender may auction the property. |
| What happens to the title to a foreclosed property in a strict foreclosure? | It transfers immediately to the lienholder. |
| What is the function of a deed in lieu of foreclosure? | It avoids foreclosure by transferring legal title to the mortgagee. |
Created by:
amybeth1105
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