A California buyer defaults on a Cal-VET loan after making payments for 8 years. What remedy does the California Department of Veterans Affairs have that differs from a conventional lender's remedy?
Correct Answer
B) The state can cancel the land contract and recover the property without a formal foreclosure proceeding
Because Cal-VET uses a land contract (contract of sale) rather than a deed of trust, the state holds legal title throughout the loan term. If the veteran defaults, the state can cancel the contract and recover the property without going through the formal foreclosure process, since the state already holds title.
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Related Topics & Key Terms
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Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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