A borrower in New York has filed for bankruptcy during the foreclosure process. What effect does the bankruptcy filing have on the ongoing foreclosure proceeding?
Correct Answer
D) The foreclosure is automatically stayed (stopped)
When a borrower files for bankruptcy, the automatic stay provision of federal bankruptcy law immediately stops the foreclosure proceeding. The lender must seek relief from the bankruptcy court to continue the foreclosure.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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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