Multiple Choice
Which type of loan most often involves long-term repayment over 30 years?
28
views
9. Current Liabilities
Types of Liabilities
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
In a lien title state, if Justin falls behind on his mortgage payments, what is the most likely consequence?
A
Justin's personal assets are immediately seized by the lender.
B
The lender can initiate foreclosure proceedings to recover the property.
C
The mortgage is automatically forgiven after a grace period.
D
The lender automatically takes legal title to the property without court action.
Verified step by step guidance1
Understand the concept of a lien title state: In a lien title state, the borrower holds the legal title to the property while the lender has a lien on the property as security for the loan.
Recognize the implications of falling behind on mortgage payments: If the borrower fails to make payments, the lender has the right to enforce the lien to recover the debt.
Learn about foreclosure proceedings: Foreclosure is a legal process initiated by the lender to recover the property and sell it to satisfy the outstanding mortgage debt.
Clarify why other options are incorrect: Personal assets are not immediately seized, the mortgage is not forgiven after a grace period, and the lender does not automatically take legal title without court action in a lien title state.
Conclude that the most likely consequence is the lender initiating foreclosure proceedings to recover the property.
Related Videos
Related Practice
Types of Liabilities practice set
Problem sets built by lead tutorsExpert video explanations