Finance
A Connecticut homeowner has a first mortgage of $300,000 and a home equity line of credit (HELOC) of $50,000. If the homeowner defaults and the property sells for $330,000 at foreclosure, how are the proceeds distributed?
ASplit equally between the two lenders
BThe first mortgage lender receives $300,000 and the HELOC lender receives $30,000✓ Correct
CThe HELOC lender is paid first as the most recent lien
DBoth lenders share the loss equally
Explanation
Liens are paid in priority order. The first mortgage has priority and receives its full $300,000. The remaining $30,000 goes to the HELOC lender, leaving a $20,000 deficiency on the HELOC.
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