During a foreclosure proceeding in Westchester County, New York, the borrower files for bankruptcy after the lis pendens has been filed but before the foreclosure sale. What is the most likely immediate effect on the foreclosure proceedings?
Correct Answer
A) The foreclosure proceedings are automatically stayed (halted) due to the bankruptcy
When a borrower files for bankruptcy, an automatic stay goes into effect under federal bankruptcy law, which halts most collection activities including foreclosure proceedings. The foreclosure cannot proceed until the bankruptcy court lifts the stay or the lender obtains relief from the automatic stay.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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