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MMLU / A man borrowed money from a lender and mortgaged land that he owned to secure…

Problem

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question

A man borrowed money from a lender and mortgaged land that he owned to secure repayment of the loan. Before he had completely repaid the loan, the man conveyed the land to an investor, who expressly assumed the loan. The note and mortgage did not contain a due-on-sale clause. After the investor had made several payments on the loan, she defaulted on two payments. The lender notified the man and the investor of its intention to accelerate the loan pursuant to the terms of the note and mortgage unless the default was cured within 60 days. When neither the man nor the investor made the required payment, the lender accelerated the loan and initiated foreclosure proceedings, naming both the man and the investor as party defendants. The foreclosure sale resulted in a deficiency. The lender has sought a deficiency judgment against only the man, because the investor has become insolvent in the meantime. Will the court likely find the man liable for the deficiency?

choices

  1. No, because the investor's express assumption of the loan released the man from liability.
  2. No, because the lender must first seek to obtain a deficiency judgment against the investor.
  3. Yes, because even after the assumption, the man remains liable as a surety of the investor in the absence of a release from the lender.
  4. Yes, because the note and mortgage did not contain a due-on-sale clause.

subject

professional_law

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Source and history

task_id
3f8bcf48-e09a-5c1e-85e4-dbbb5bf885bb
task_key
all--test--3f8bcf48-e09a-5c1e-85e4-dbbb5bf885bb
task_revision_id
1
config / split
all / test

Official source

initial import