Ohio Real Estate Salesperson Exam — All Questions
← Back to practice2 questions
The process by which a lender forces the sale of a property after a borrower defaults on the mortgage is called:
- a.Redemption
- b.Novation
- c.Subordination
- d.Foreclosure✓
Foreclosure is the legal process by which a lender forces the sale of the secured property to recover the debt after the borrower defaults. Redemption, by contrast, is the borrower's right to reclaim the property by paying the debt.
A borrower assumes an existing loan and both the buyer and the original borrower remain liable unless the lender releases the seller. To fully release the seller, the lender would use a(n):
- a.Novation✓
- b.Acceleration clause
- c.Estoppel certificate
- d.Satisfaction of mortgage
A novation substitutes a new party for the original borrower and, with the lender's agreement, releases the seller from liability. Without novation, an assuming buyer takes over payments but the original borrower may remain secondarily liable.