In a seller-financed transaction, the seller acts as the:
Correct Answer
B) Lender, holding the promissory note and retaining a security interest in the property
In seller financing, the seller extends credit directly to the buyer rather than requiring the buyer to obtain a loan from an institutional lender. The seller holds the promissory note as evidence of the debt and typically retains a deed of trust or mortgage on the property as security. If the buyer defaults, the seller has the right to foreclose. This arrangement is common when buyers cannot qualify for conventional financing or when sellers want to generate installment income.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
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.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
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