The defeasance clause in a mortgage states that when the borrower pays off the loan in full:
Why The lender must release (defeat) the lien and return legal title if applicable Is Correct
Answer B: The lender must release (defeat) the lien and return legal title if applicable
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
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Key Terms to Know
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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