Answered

To buy a house, an investor secured a $10,000 mortgage from a bank. The bank promptly and properly recorded its mortgage. Subsequently, the investor financed certain improvements to the house with a $2,000 mortgage on the land from a finance company. The finance company promptly and properly recorded its mortgage. Before the investor made a payment on either mortgage, the federal government announced that it would begin storing nuclear waste products in the area. The value of property, including the investor's house, plummeted. The investor did not pay either the bank or the finance company, and the bank brought a proper action to foreclose, notifying both the investor and the finance company. A buyer bought the house at the foreclosure sale for $6,000, which was its fair market value. There are no special statutes in the jurisdiction regarding deficiency judgments.What does the investor owe?response - correctA $5,000 to the bank and $1,000 to the finance company.B $4,000 to the bank and $2,000 to the finance company.C Nothing to the bank and $2,000 to the finance company.D $4,000 to the bank and nothing to the finance company

Answer :

jepessoa

Answer:

B) $4,000 to the bank and $2,000 to the finance company.

Explanation:

Since there are no special statutes in the jurisdiction regarding deficiency judgments, the buyer still owes the bank the remaining $4,000 of the debt (= $10,000 - $6,000), and $2,000 to the finance company.

The foreclosure sale's proceeds went to the bank but they did not cover the whole debt, so the buyer is liable for the remainder of the debt. The buyer is also liable for the money owed to the finance company since the second mortgage was terminated by the foreclosure of the first mortgage.

Other Questions