At closing, Maya Morgan agrees to take over the seller's existing mortgage rather than obtain a brand-new loan. What is this financing arrangement called?
Correct Answer
C) Loan assumption
Loan assumption is correct because the facts match the taking over of an existing loan obligation by a new borrower, subject to any required lender approval. That is the best description of the relationship, right, or legal concept tested here.
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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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