On the eve of the foreclosure sale, Lena Howard pays the entire unpaid loan balance plus accrued interest and the lender's costs, and the sale is called off. Which right is Lena Howard exercising?
Correct Answer
C) Equity of redemption
Equity of redemption is the borrower's right to redeem the property before the foreclosure sale by paying the whole debt, with interest and costs, and so extinguish the lien. Reinstatement is the narrower relief of paying only the delinquent amounts plus fees to put the loan back on its original schedule. Because Lena pays the full balance rather than the arrears, and pays before the sale rather than after it, this is the equity of redemption.
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Related Topics & Key Terms
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.
More Financing Questions
Compliance case Cedar Docket frames the issue this way. A Florida buyer borrows $272,000 on a purchase price of $320,000. What is the loan-to-value ratio?
A lender in Montgomery is considering whether to initiate foreclosure on a defaulting borrower's residential property. The borrower has missed six consecutive mortgage payments. Under Alabama law, which step must the lender complete FIRST before the property can be sold at a foreclosure sale?
In Delaware financing, which theory is practiced?
Audit memo Cedar Case highlights this Florida rule. The purchase price is $360,000, and the lender will lend 90% of the price. How much cash down payment must the buyer bring?
A California buyer is comparing two deed of trust loan offers. Loan A has a 5.5% interest rate with 0 points. Loan B has a 5% interest rate with 2 points. Which tool required by federal law helps the buyer compare the true cost of these two loans?
- → A Florida real estate licensee is helping a buyer understand loan-to-value ratios. The buyer asks about the maximum LTV typically allowed for conventional loans without private mortgage insurance (PMI). What should the licensee explain?
- → A borrower in Greenville, South Carolina defaults on her mortgage payments. The lender wants to recover the property. Which process must the lender follow under South Carolina law?
- → Tom defaults on his mortgage in Fargo, North Dakota. His lender, Heartland Savings, wants to foreclose. Which of the following correctly describes the foreclosure process Heartland Savings must follow under North Dakota law?
- → Under Alaska's Deed of Trust Act (AS 34.20.070–34.20.135), which of the following is NOT a required party to a deed of trust?
- → James Wilson's share loan application for a co-op in Staten Island was approved. What will secure this loan?
- → Tennessee has which redemption period after foreclosure?
- → Private Mortgage Insurance (PMI) is typically required on a conventional loan when the loan-to-value (LTV) ratio exceeds what threshold?
- → A homeowner in Oklahoma City is purchasing a property with a sales price of $320,000. The buyer is obtaining a conventional loan with a 20% down payment. The lender charges an origination fee of 1.5% of the loan amount. What is the total origination fee the buyer will pay at closing?
- → Deficiency judgments in Alabama are:
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