Susan owns a home in Cambridge, Massachusetts as her primary residence. She has a declared homestead under MGL Chapter 188. Her lender is foreclosing on her first mortgage due to non-payment. Which of the following correctly describes the effect of Susan's homestead declaration on the foreclosure?
Correct Answer
C) The homestead declaration does not protect against foreclosure by the mortgage lender because the mortgage was granted voluntarily
Under MGL Chapter 188, the homestead declaration protects equity from unsecured creditors, but it does NOT protect against foreclosure by a mortgage lender whose mortgage was voluntarily granted by the homeowner. The mortgage lien was created before or alongside the homestead, and the homestead does not take priority over a voluntarily granted mortgage. The foreclosing lender can proceed with the sale regardless of the homestead declaration.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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