A Washington State broker is explaining the deed of trust foreclosure process to a first-time homebuyer. The buyer asks what happens to any sale proceeds that exceed the amount owed to the lender after a trustee's sale. Which of the following is the most accurate statement under RCW 61.24?
Correct Answer
D) Surplus proceeds are distributed to junior lienholders and then to the former owner after all claims are satisfied.
Under RCW 61.24.080, after a trustee's sale, proceeds are distributed in a specific order: first to the trustee's fees and costs, then to the beneficiary (lender) to satisfy the debt, and then to junior lienholders in order of priority. Any remaining surplus is paid to the former owner (grantor/trustor). This ensures that the former owner receives any equity above the debt and foreclosure costs.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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