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Exam 29: Creditors Rights and Remedies

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Question 21

True/False

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Homeowners' insurance does not protect the lender's interest in the event of a loss due to certain hazards, such as fire or storm damage.

A) True
B) False

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Question 22

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An individual who borrows funds from a financial institution to purchase real property by taking out a mortgage is a mortgagee .

A) True
B) False

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Question 23

Multiple Choice

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Credit Inc. lends $10,000 to Dace. Egan acts as Dace's surety. When the loan becomes due, Egan pays it in full. As a consequence, the surety gets

Most liens have little practical use, because liens generally do not take priority over other claims to the same property.

The purpose of a homestead exemption is to ensure that a debtor will retain some form of shelter.

Federal law provides a minimal framework to protect debtors from losing all their income in order to pay judgment debts.

Brie, Cam, and Dei are co-sureties of Edie's debt to Finance LLC. Brie pays the entire debt. Her right of contribution entitles her to recover any amount paid above the surety's obligation from

Dion has a mortgage loan with Eagle Bank that includes a prepayment penalty clause. If Dion repays his mortgage in full within the period specified in the clause, he will most likely be

Equitable redemption allows a lender to gain title and regain possession of a property.

Business Inc.'s debt to Cartage Company is past due. Cartage brings a legal action against Business to collect. To ensure that a judgment in the creditor's favor will be collectible, Cartage asks the court to order the seizure of the debtor's property. This is a request for

A fixed-rate mortgage is a standard mortgage with an adjustable rate of interest.

To buy a house, Tom obtains a mortgage loan with Universal Credit Union. Later, Tom defaults on the loan. Universal informs him that the property will be sold in a foreclosure proceeding. Before the sale, to gain title and regain possession, Tom can

Equipment Company holds a lien on Fertile Farm's equipment. The equipment can be sold to satisfy the debt

To purchase a house, Elma obtains a mortgage loan from Fidelity Bank. Later, Elma is unable to make payments on the loan. Meanwhile, the market value of the house has declined. Fidelity agrees to a sale of the property for less than the amount due on the loan. This is

Ran is a surety for Su's loan from Tempo Credit. When Su pays the debt owed to the lender, Ran's right of subrogation entitles the surety to

Because a mortgage conveys an interest in property to the lender, to protect the lender's investment, the mortgage typically requires the borrower to

Foreclosure is a process that allows a lender to legally repossess and auction off the property that is securing a loan.

Any payment of the principal obligation by the debtor will discharge the surety or the guarantor from the obligation.

Bach borrows funds from City Bank to pay his tuition. Dvorak co-signs the credit application. After the loan agreement is signed, Bach agrees to a higher rate of interest without telling Dvorak, who is thereby

Rose applies for a credit card at Sell-Mart. The terms do not include a pledge of certain property to ensure the repayment of charges to the card, but it does provide that Sell-Mart can assess interest on the unpaid amount of a monthly statement. In this situation, the unsecured party is