A Michigan property sells at a sheriff's sale for $175,000. The outstanding mortgage balance is $155,000, and the foreclosure costs (attorney fees, publication costs, and sheriff's fees) total $5,000. How much will the mortgagor receive from the surplus proceeds after the mortgage balance and foreclosure costs are paid?
Correct Answer
A) $15,000
Step 1: Identify the total claims against the sale proceeds. Outstanding mortgage balance = $155,000. Foreclosure costs = $5,000. Total claims = $155,000 + $5,000 = $160,000. Step 2: Calculate surplus proceeds. Sale price ($175,000) − Total claims ($160,000) = $15,000 surplus. Under Michigan law, surplus proceeds from a foreclosure sale are paid to the mortgagor (or junior lienholders in order of priority). The mortgagor receives the $15,000 surplus.
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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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