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A house has a first mortgage of $170,000 and a second mortgage of $34,000. The property has just been sold at a foreclosure auction to a speculating investor for $210,000. Assume that all costs of the foreclosure sale are included in these balances. Which of the following statements is NOT TRUE regarding the distribution of fundsa. The foreclosed owner receives $6,000
b. The second mortgage holder receives $34,000
c. The second mortgagee receives nothing unless they initiated the foreclosure
d. The first mortgage holder receives $170,000

Respuesta :

alaosundaymoses

Answer:

option c is the right answer...( the statement is false)

Explanation:

a person can mortage his or her property for loan and the law also allow a second mortgage.. for example if bank A authorizes a loan to a client based on a property and bank B also authorizes a loan based on thesame property, in an event of foreclosure bank A will be prioritized over bank B i.e bank A will recouped it debt before bank B but if there is any left over from the sale proceeds bank B will also recoupe it debt. in this situation the second mortage holder will receive it $34,000 due.

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