Property - Foreclosure Flashcards
Why must a junior mortgagee be named in a senior mortgagee’s foreclosure action?
To avoid being wiped out by foreclosure
Foreclosure destroys interests junior to the mortgage being foreclosed.
What happens to interests junior to the mortgage being foreclosed?
They are extinguished by foreclosure.
Junior mortgagees are necessary parties to a senior mortgagee’s foreclosure action.
True or False: Interests senior to the foreclosing party are necessary parties in a foreclosure action.
False
Their interests are not affected by foreclosure.
Define statutory redemption.
The right of a mortgagor to recover land after foreclosure sale by paying the sale price.
Typically provided for a fixed period, such as six months or one year.
Define equitable redemption.
The right of a mortgagor to recover land by paying the overdue amount on the mortgage before the foreclosure sale.
The full balance must be paid if an acceleration clause is present.
What is the order of priority for allocating mortgage foreclosure sale proceeds?
- Expenses of the sale
- Principal and accrued interest on the foreclosing party’s loan
- Junior lienors in order of priority
- The mortgagor
Senior lienors receive none of the proceeds.
What is the consequence of a grantee assuming a mortgage?
The grantee promises to pay the mortgage obligation, making the mortgagee a third-party beneficiary.
The grantor-mortgagor becomes a surety who is secondarily liable.
True or False: The bank can obtain a judgment against both the landowner and the attorney after a mortgage assumption.
True
The bank may collect only once, but can sue both parties.
What is the investor’s liability if there are no anti-deficiency statutes?
The investor remains personally liable for any shortfall from the foreclosure sale.
Proceeds are first used to satisfy the foreclosed loan.
Fill in the blank: A junior mortgage does not remain on the land after _______ of the senior mortgage.
foreclosure
How is the priority of a mortgage generally determined?
By the time it was placed on the property.
Foreclosure terminates interests junior to the mortgage being foreclosed.
What happens if a landowner modifies a senior mortgage?
The junior mortgage gains priority over the modification.
If the first mortgage debt increases, the second mortgage retains priority over the increase.
What is the liability of the original mortgagor if a mortgage is modified after a grantee assumes it?
The original mortgagor is discharged of liability for the modified amount.
The owner is not liable for amounts increased by the modification.
