Question

2. Which of the following terms refers to an owner’s right to redeem a property before foreclosure sale?

A)        Equity of redemption

B)        Statutory redemption

C)        Attachment

D)        Execution

4. Given the following information, calculate the loan-to-value (LTV) ratio of this loan:
   1. Monthly payment in the first year: $3,688
   2. Loan amount: $1,000,000
   3. Purchase price: $1,300,000

1. 1.75
2. 1.30
3. 0.77  
4. 0.50

5. Suppose you just signed a $50,000, 20-year mortgage with a 15% fixed interest rate with monthly repayments.  What proportion of the loan will have been paid off at the end of year 5?

1. 79.88%
2. 5.92%
3. 93.42%
4. 20.12%

Answer 1

Solution:

First Question

A) Equity of redemption

Equity of redemption is the right of an owner to redeem property secured by a loan that has been accelerated prior to foreclosure. For example ,if a person is behind on their mortgage payments, and the lender has accelerated the loan-acceleration is a demand for full payment-or foreclosure will follow. The person can find other sources to repay the demand. In simple words, paying off the loan with funds from another source allows the person to keep the property.

Reasons for wrong options:

Option B:

Statutory redemption is the right of a mortgagor to regain ownership of a property after foreclosure.

Option C:

Attachment is a legal process in which the court at the request of the lender, designates specific property owned by the mortgagor to be transferred to the lender, or sold for the benefit of the lender.

Option D:

A property execution means satisfying a judgement by seizing the property. The court will order an official to take possession of property owned by the mortgagor and conduct a public auction to convert the property to cash.

Hence the correct option is option A) Equity of redemption